bad mortgages are costly to everybody and to be successful, your business in particular is set to make loans to borrowers can repay. is there cutting your opinion opinion, a benefit if the cpfb's ability to pay rules are structured appropriately? >> thank you at the question. yes, i think so. the ability to pay again is characterized as a safe harbor, which will provide a bright line, especially for small vendors that don't have the ability to hire the compliance staff. if you have a 25 person business and you need to hire an attorney to help you with the rules and regulations, it becomes a very

burdensome -- very burdensome endeavor. so it is unfortunate that you characterize it as a safe harbor, that it is clearly interpretable by small businesses. i think it will be a vast boot to art industry and consumers to america as well. >> thank you. many in the baking industry have expressed concern that the dog frank adipocyte for lending to small businesses. how's that for small business committee then struggling to get credit for brains as well before the financial rates ♪ did? is there something that could be done perhaps outside of this lot were something different to hope >> thank you, the first answer is yes. the challenge small businesses face in the credit markets right now are not 2011 or 2010. they've been around for several

years now. it is not improving. that is a real concern. you know, honestly at this point, part of what everybody is. this lets not do anything to make it worse. it's not exactly clear what is coming up the worst. but when we know for sure that again the commercial then dean markets are not frozen, but they are not in good shape, sort of our message in the message we hear from our business in main street members of the certainly not take away tools that do seem to be working on now. we can still use credit cards and borrow money against our car title for home, even those markets are functioning fairly well. so their message to essays, do no harm essentially. and that means working close to you with the cpfb to make sure they understand the knock on effects to the small business lending world in the actions they're taking. >> thank you, mr. chairman.

>> thank you, mr. chairman. mr. ranking member, thank you for the panel being here today. mr. sharp, first question to you and others can chime in. what do you see in your assessment the purpose of the cpfb to be? >> i believe the purpose of the cpfb is to find fraudsters in the consumer products market and put them out of business or clamped down on their fraudulent faith. protect consumers against bad actors in the market. >> anyone else? >> i think that is part of the cpfb's mission. cpfb's mission is to make sure we affair, trained parent and competitive consumer finance markets. that is not just getting rid of pride. it's also ensuring disclosures are clear, but we can have good price competition in the market. >> to read -- ugly head prior to this any other government agency is someone who is doing this?

do we see this as a redundancy or some type of the duplication of effort out there from the government? >> prior to the dodd-frank i come in some parts of the consumer finance space for regulated by a laundry list of federal agent these. this is one of the problems, that you had a regulatory market that was splintered. you're the federal reserve, the ftse, currency office of thrift supervision, even the department of defense can hide each having little spaces in the market and many things fell between the cracks and also the missions, the consumer protection mission given those agencies was typically secondary and subordinate mission to other nations, particularly to think safety and soundness, which is just a fancy term for bank profitability. so abusive lending product practices is there profitable.

thanks go to them for fun. if you're the comptroller of the currency in her primary mission is making sure banks are profitable, you're tempted to turn a blind eye because they are profitable and that's what we saw. that's a letter to the housing bubble. >> in your assessment for the panel, this is something we needed to institute. this is the nation see bureau or a government program that we needed to institute? >> without a doubt. the chief financial crisis in 2018 minus consumer financial products, mortgage products. we need to have better consumer financial protection. >> i will say it's no secret the chamber didn't support the consumer protection bureau and at this point, you know, our focus is it is they are, i've

been running, no longer an idea on paper. and you know, our concern now is that it is beginning -- as the tears begin to turn and issue regulations and begins to do at work, our idea that it not become a duplicator about their agencies work. there is some cases, at least one with the federal trade commission, with a purist fiction and federal trade commission jurisdictions overlap. and that was unintentional to some degree in the lab requires the two agencies to prevent -- to prevent a sort of stepping on each others chose, to prevent situations where they are conflicting with one another. we do have a general concern that will be difficult to avoid. >> mr. jones, mr. fleming, do you believe the cpfb will enhance free market competitiveness and much but no real spirit, or not? >> mr. west, thank you for the

question. i think -- we were happy to see the cpfb's move towards consolidating the truth and then dean and the good faith estimate disclosures. to forest that has been a challenge for the industry being administers by two separate -- formerly by two separate federal agencies that do not always see eye to eye in terms of what should be done. we do think there is real benefit they are. another benefit could be as our industry is heavily involved in automation in order to do -- to comply with multiplicity of roles and rights that we have. i was very encouraged today to hear that the cpfb will be doing an economic, you know, across benefit analysis to determine whether or not and to the extent that is what we do, i think it can be a boon not only to the

industry and help to lower some cause, but it also will be a boon to consumers who hopefully will have less confusing and clearer disclosures. so there definitely are some benefits. >> mr. west, since i am a trucker and not a banker, i'd be hard pressed to express an overall mission of the trains take. what i am concerned about is any new regulations that seem to me as someone sitting in springfield, virginia shouldn't apply to mail the sun coming down or created new regulatory requirements. from that perspective, i am concerned about the section. overall i'm not in a position to register anything in the group as a whole. thank you. >> very well. mr. chairman, i yield that. >> thank you, mr. west. to each of the panelists, if you could identify just one top

issue that bothers you about cpfb, the top issue you think i could be improved, what would that be? mr. jones. >> thank you, mr. chairman. i think our top issue, with the cpfb, will be declared the of the rules and regulations issued and the ability to receive entries onto industry and put prior those regulations being implemented. >> mr. sharp. >> mr. chairman, our primary -- the changes we are pushing for primarily are structural. it's very difficult to move out disgusted to know exactly what problems may arise and when and what set her. so what we are advocating for is expanding coming you know, replacing the single director with the panel ensuring safety and soundness and compromise through more effective check a

provincial regulators. so at this point, we think the best long-term hedge against poor policymaking by this agency or any other independent agency is sort of collaborative decision-making at the top with input from diverse sectors, bipartisan input. but that is our top priority. >> mr. fleming. >> mr. chairman, i think coaches have your organizations take into consideration unintended consequences such as data collection requirements than median. with the avengers and be helpful to the organization. however, the small businesses have to comply to new regulations to provide the data. >> mr. levitin. >> as you might suggest i'm going to give a rather different answer. the two most important things with the cpfb are number one they should confirm a directory

number two if you want to change the scope of cpfb regulation, i would strongly urge auto dealers and realtors to see a cpfb. there's not a good argument for exempting men. >> thank you. mr. allgeier? >> thank you, panelists. i want to thank you for coming down and testifying on this important matter. with that, the committee is adjourned. [inaudible conversations] [inaudible conversations]

>> that figure that is moving the veil of ignorance from human understanding is an american invention. that is not a classical statue, but it is datta classical for what reading is all about.

>> the senate veterans affairs committee this week looked at the long-term health care needs of veterans returning from iraq and afghanistan. actuaries talk about the challenge in estimating the future cost of treating brain injuries and posttraumatic stress disorder. also, the wife of a wounded marine corporal talks about her difficulty in getting care for her husband. this is an hour and 40 minutes. >> good morning and welcome to today's hearing, where we are going to examine the lifetime cost of supporting our newest generation of veterans.

as we all know, when our nation goes to work, it is not just the cost of fighting that war that must be accounted for. we must include the cost of caring for veterans and families long after the fighting is over and that is particularly true today, at a time when we have more than half a million iraq and afghanistan veterans amid the hope care system that is in over 100% increase since 2008. this presents a big challenge and one that we have no choice but to step up to meet if we are going to avoid many of the famous geeks we saw with the vietnam generation. but it is more than just the sheer number of new veterans that will be coming home that poses a challenge. it's also the extent of the month, host visible and invisible and the resources that will take to provide our veterans with quality care. to the wonders of myerson msn,

citizens would be lost in previous conflicts are coming home to leopard and fulfilling life, but they will need a lifetime of care from the va here today, we will hear from the congressional budget office, the government accountability office, the rand corporation and iraq and afghanistan veterans of america appeared in an effort to help us quantify and understand these costs and ensure we can meet future needs of our veterans and their families. and today we are so fortunate to be joined by one of those brave family members, crystal nicely, who is not only a wife, but also a caregiver to her has been, bring corporal todd nicely. todd was seriously injured by an ied in the southern helmand province of afghanistan. since then he is come home to fight every day, focus on his recovery and may even heard yesterday that he is already starting to drive again. i want to take a moment to say thank you for your service to our country.

he is shown bravery not only as a marina nastiness and, but also through the courage he displayed during your recovery. i invited krystal here today because i think it is incredibly important that we hear her perspective. the costs we have incurred for the war in iraq and afghan and will continue to incur for a very long time extend far beyond dollars and cents. when i first met crystal last month while touring bethesda naval base, her story illustrated that. kristol is here today to talk about the human cost and not cost is not limited exclusively to the servicemembers and veterans who fought and are fighting our wars, but is also felt by the families of these heroes who worked tirelessly to support their loved ones through deployment and rehabilitation, day in and day out. then he let crystal have given up their own jobs to become full-time caregivers and advocated.

last month while testifying before the senate appropriations subcommittee on defense, chairman of the joint chiefs of staff, admiral mullen, told me that without family members we would be nowhere in these wars. i couldn't agree more. after your crystal story, that will be even more clear. as the members of this committee know, over the course of the last few years, we have examined how the veterans of today's conflict are faced with unique challenges that va and dod are often fallen short of meeting. we have explored mental health care to the need to be fulfilled. cutting-edge prosthetics that must be maintained, a wave of new and more complex as it claims that are taking too long to complete. they need to fulfill the promise of the post-9/11 g.i. bill and the need to support veterans who are winding up out of work and on the street. all of these unmet challenges, with cost. some cost will be be able to

calculate. some will not be fully known for decades. by today's hearing will be a reminder that in order to meet these costs, we must safeguard the direct investments we make in veterans care and benefit. we must get the most value out of every dollar we spend and we must start planning today at a time when critical, long-term budget decisions are being made. as we all know, there is no question that we need to make smart decisions to tighten our belts and reduce our nation debt and deficit. no matter what fiscal crisis we face, no matter how divided we may be over purchase to cutting our debt and deficit, no matter how heated our rhetoric in washington d.c. kids, we must remember that we cannot balance their budget at the expense of the health care and benefits our veterans have earned. their sacrifices have been too great. they have done everything asked of them. they've been separated from families to repeat the claimant. they have sacrificed life and

limb in combat and they've done all faultlessly with honor to our country. the commendably onto them is nonnegotiable. not just today, but far into the future. i want to thank all of our witnesses for being here and are committee members and i'll turn to senator brown for his opening statement. >> thank you, manager for holding this important hearing. i think you want to recognize corporal knisley and his wife mcchrystal to be here and for your devoted service to our country and the core. as you know today were this is the resources the va will need in the future to care for current generations of wounded warriors and as the chairwoman noted, will have a total of 2.3 million servicemembers that have been deployed. 45,000 have been wounded in action. as we look to the future and

beyond for the next 10 years, it is important to understand where we had them what we've learned because over the last 10 years we've seen a large increase in the va's medical care accounts. since 2001, the va medical care budget has grown by 27 billion or 130%. last october at the congressional budget office congressional budget office published analysis on this topic and their analysis indicates that we have some very real challenges coming up that we all agree that we must provide the funding needed to support this generation of wounded warriors and continue caring for those that have previously boring to hidden scars of war. as you know, we will hear from crystal, the wife of the wounded warrior and her husband, todd who was severely injured in march 2010 when he stepped on an ied while on patrol in afghanistan that left him as a quadruple amputee. he has been able to move on with

his life somewhat and yet he ranted to and continues to run into bureaucratic hassles and a process that was supposed to alleviate these types of problems. prompt determination cannot be made for someone who has lost all four lands. but hope is there for the others who have lesser runes or invisible when? members of the rand corp. will talk about the gaps in access to mental health services at the va in and particular long wait times for appointment. i am disappointed however our friends at the va will not be here to offer their testimony, but i'm sure we'll follow up with them, madam chair, with your leadership. these are just a few problems that we have and continue to persist and we've all noted these throughout her time here.

cost for caring for the troops and we should keep an eye monday would not be the only solution to promises they face. if that were the case, colonel nicely would have breezed through. with our company financial crisis in the way to assess every dollar that we spend. to make sure it is being used effectively, to deliver services and benefits that are wounded warriors and veterans need in order to give them an opportunity to live healthier and more productive lives. thank you, madam chair. i look forward to the testimony. >> thank you manager for convening this hearing. thoughts welcome on the witnesses. appreciate you all being here. i want to sing aloud to paul rieckhoff, but more importantly thank you for ipc for veterans. you've been a bulldog. crystal nicely, thank you for

being here. when we say they go to war, we say their spouse goes with them. we appreciate you being here to tell your story. it's going to be a great perspective to hear. the welfare of the young men and women is always at the forefront of our minds and the question to whether to send them into harm's way to begin with is something that can never be taken lightly. in doing so, we prepare ourselves for human and monetary cost of these decisions. it is not just about providing troops armaments and equipment they needed tools to be successful in missions. it's about ensuring we are fully capable of caring for them and their families when they return home. to quote the vfw commander of the detestation cannot afford to take care of her veterans is the day the station could quit creating them, something we should keep in mind as her veterans come home in need of care for injuries both seen and unseen. i very much look forward to this

hearing and i appreciate, madam chair, you convening. >> thank you very much. >> non-chair, let me also express my appreciation. thank you for having this hearing to the members of the panel, thanks for being here and thanks to your commitment. let me, if i might, just associate myself with comments that it had made both by the chair and by the ranking member. i believe they are hitting the nail on the head. in my view of the world, part of the cost of war is caring for veterans. there will be a point at which the uniform s. set aside as they come home and need to find a place, if you will. if they have medical needs, we need to find a way to address those needs. one of those things that is also

enormously perplexing to me is the inability to transition so many veterans into the work force. now i appreciate the economic times are difficult and challenging. we all know that. what it is so disheartening when i talked to veterans and go around the room and try to figure out where they are at in their life and how they are trained to shinning into the workforce. and so many say haven't been able to find it a job. the remarkable thing for me as that is in a state where unemployment is actually quite low, 1.4%. so if i might just choose something for those who are going to testify today and maybe paul, i will point to you specifically. i am especially interested to hear testimony about the challenges that our veterans are experiencing in transitioning from military life into a

civilian job. it just seems to me that we can do a better job here. i know that hiring a hero at include several positions to address these issues. that's good. i applaud any efforts that have been made that might make the situation a little bit better. but i am especially interested in where we are not meeting the issues of training and some cases, rehabilitation and the veterans can be prepared to enter the workforce. what that, to all of you who advocate for veterans to those who have served and those families who have been such an important part of this service, i want you to know how much i appreciate your commitment to our country. thank you, madam chair. >> thank you. senator begich.

>> thank you, senator murray for putting this form together today. i want to thank the witnesses for being here. i will not be able to stay. i could chair cushions coast guard meeting in 12 minutes, but it went at least you know first i received all of your written testimony and i appreciate that. i have questions i will submit for the record. we'll tell you in a short time at the summit and is a member of the committee heard testimony from brave warriors and families over the last two and half years and i want to be clear that expanding the lifetime cost of supporting this new generation of veterans does not mean we will not be there for you. you've answered the call of duty and i've been there for our country and will be there for you. the cost of veterans and their families house suffered both financially and emotionally places burdens that can last a lifetime. with alaska having the highest number of veterans per capita of any state in this country come i

have seen the syntax firsthand. i will tell you what i tell every time i see a veteran at home. thank you amid thank you coming thank you for the service and a sacrifice, not only as an individual, but also as a family. we promised to fight everyday to do it can to make sure those services are there. one of the issues also met for the record for you all to answer is the question that i know i face, senator tester and senator johanns with rural veterans, veterans that have been extremely difficult time accessing health care. more more veterans are choosing to live in rural communities. in my state, 80% cannot be access by road, so it's very difficult for them to access the health care they need. or physical or mental resources they need. i think i'd be interested in your comments if you have them, but she put on the record again or i will submit as i am for the record a written question about

how to we figure out the access points to ensure that the quality care, no matter where you live is a veteran, doesn't matter if it's a small village in alaska or a large urban city, how we make sure we get the health care they need, they are owed in a timely basis. so i'd be anxious for your comments. i know it is a question that we're talking about, the alaska herald is working to create a access areas that are impossible for veterans to get the service they need. i'd be interested in your comments then again, madam chair, thank you for holding this important hearing because as we engage in wars, it is a two-part cost. one is the action of the war and the actions after. and sometimes i can tell you is a new member here, my personal opinion is when they engaged in the wars in iraq and afghanistan , not a lot of people thought about the next cost. so i'm glad this hearing is here. it is a commitment we have to

make in his ode to the veterans and families of veterans pay for thank you for all of you being here. >> thank you very much. so at this time, will now turn to her witnesses. will first hear from mr. paul rieckhoff, executive director and founder of iraq and afghanistan veterans of america. next we'll hear from dr. james hosek, senior economist from the rand corporation. we will then hear from mrs. mrs. crystal nicely, who as i mentioned that opening statement as a caregiver and spouse of an operation enduring freedom veteran. following her testimony, we hear from mrs. lorelei st. james, director of physical infrastructure for government accountability office. in closing will be mrs. heidi golding will testify on the behalf of congressional budget office. she is cbo's and analysts in the national security division. thank you again for all of you for being here this morning for this hearing. mr. rieckhoff, will begin to

you. >> iraq and afghanistan veterans of america over 200,000 of supporters, many here today, thank you for invited to testify the long-term costs were for veterans. i served america in 2,032,004 as platoon leader with rudimentary division. my unit returned and i came home from war, we returned to a country confused by and a bit uncomfortable with this for years. people wanted to help or they just didn't know how. bring to light the true cost of wars is why we formed a va can a cramped studio apartment 2004. this hearing comes at a critical time. right now our nation teeters on the edge of default. servicemembers and veterans are left with turned in a bit. members from across the country of contact with the fast two days. it's a lot also get disability, retirement, g.i. bill checks

they so rightly earned or even their base pay. if it have to do what's already years to these questions. it's up to congress and the president to get us these answers. we're here to extend the lifetime cost of this generation of vets and also at the bottom line up front, something i learned in the army. it's going to be expensive and it's going to be complex. history shows us that will be less expensive and less complex if we invest as a nation in our veterans now. doing so also has the added bonus to cultivate a generation of leaders, future teachers, doctors and the ceos and even a few members of congress. they will lead our nation the only way they know how, from the front. the current condition into civilian society isn't pretty. officially, 13.3% are unemployed as of this past june. more than four percentage points higher than the national average. we see closer to 20%. indiana 24% in michigan nearly

30%. nationwide, that means approximately 260,000 people in real numbers are out of work. that is about the same size as the entire marine corps. it does get worse. the military and veterans community is also facing a suicide epidemic. there were 462 cents at the military investment of between 2005 in 2009, when servicemember committed suicide every 30s takes hours and more committed suicide in 2010 than died in combat. these numbers, while bleak, are really just the tip of the iceberg. the legacy of the worst of the keynote of the impact of multiple deployments year after year, a burden of many carried the a few. as the worst wind down, the military were likely downside, just as in all postwar period. the new surge of veterans is already returning to local communities nationwide and cost will be a word thrown around a lot.

investment though probably won't be in it should be because these are just costs. their investments. this committee and the public sector in general have done many good things for the veterans returning home. the best example of course is supposed on the g.i. bill, what does provide a cost of a hundred thousand returning servicemembers of educational opportunities they otherwise wouldn't dream of. the exciting and urgently needed here is that scum which members are certainly familiar with proves that you cannot rest on your laurels. this can and should be the first jobs bill passed by this congress. the legislation and government can only do so much. the private sector must do its part, too. companies hire veterans will find it's not charity. smart investment, good for their bottom line. veterans are entrepreneurial by nature and although they represent less than 1% of americans, 9% of american firms are better known. phineas goes to relate directly to trade, logistics, operations

committee medication, medicine and engineering. folks really want to support troops, they should hire them. companies and organizations have realized. ib is then proud to partner with abuse at google jcpenney, schwab the chamber of commerce in efforts to turn the tide on veteran employment. these are just government problems or nonprofit problems are their american problems. take special them serving in afghanistan that the 82nd airborne effeminate, he proved himself over and over again. he saved the life of a french soldier shot in the head and was awarded a bronze star over his appointment. he also suffered a heidi golding brain injury or an rpg attack. he was honorably discharged a month after he left the war. unable to find a job anywhere in the medical field he was looking to work as a first responder commotions what he did overseas but employers said he lacked the proper certificates. both may be many months, he was forced to collect unemployment checks to make an knee.

according to run things around. the va cuts or a paper to be a first responder and after using some of his benefits, who began his senior year at the university of wisconsin stevens point this fall. not only veterans have a happy and in other nickelodeon. sometimes we must remember that there are so many more as we paying for the future, launcher and the crossover between 600 billion won joint to care for the generation of veterans alone. those are imposing numbers to be sure especially in this time of economic recession the numbers will only increase with time if we slash veteran programs in a short sighted rash. the sacrifices our men and women have made for a nation and so is the potential for returns. when i -- before he deployed for iraq i worked on wall street. if i were analyzing potential return of this investment that would save my generation gets a strong buy rating.

investing in the generation is like buying shares of apple stock in 1976. i'm here to tell you to put your money where your mouth is. is the best in this generation. we are worth it. we will deliver that we will not let america down. we never had that we never will. thank you for your time and i look forward to your questions. >> thank you very much, mr. rieckhoff. that her james hosek. >> thank you. i would like to thank chairwomen murray and the committee for the opportunity to testify. during the tenure since 9/11, 2.2 active and reserve members have been deployed. hallmarks of the air are the growing public recognition of distresses when they servicemembers and their families in the invisible wounds second half servicemembers who deployed. in my written testimony, i'd give an overview of rand studies on the planet this morning i hope to highlight the select

finance. these touch of the following topics. the importance of total month deployment and understanding the effects, the prevalence of the had major depression of those who have deployed, barriers they face an important or providing evidence-based and unemployment. in our research, we found that extended length of deployment can a family and societal impacts ranging from the financial and emotional as it increased to four straight, academic and emotional consequences for children to burdens of reduced reimbursement within the armed services. here are some specifics. exposure to combat trauma as the single best predictor of ptsd, major depression and dramatic or an injury in the chance of exposure increases with months away. i months of deployment but negative pressure on army and marine corps reenlistment, which they countered with donna says. this meant personnel with high amounts of deployment to

otherwise would have left were kept in service and were at risk of further deployment of exposure to combat trauma. we found military divorces increase the total month of deployment. the planet probably causes additional divorces among veterans, but this has not been studied. more months of deployment were associated with more behavioral problems for children. for instance, 30% of children at elevated symptoms of anxiety, twice the rate in other studies. we do not know children's problems when the service member leaves and becomes a veteran. we found almost one entire returning servicemembers have symptoms of ptsd or major depression, problems that may affect veterans for years to come 18.4% of servicemembers in spring 2008 met criteria for either ptsd or major depression. applying this percentage of the 2.2 million servicemembers who have deployed by les at number

implies that 405,000 met criteria for ptsd or depression. we do not know the lifetime prevalence of these problems as some will develop others may diminish. servicemembers and veterans reported barriers to care. efforts underway to reduce these barriers, but more research may be needed on my veterans do not seek care from what might induce them to do so. we found about half of those with probable ptsd or depression have not a care in the prior year. the reasons include concerns about confidentiality, potential negative career repercussions that care was that come wait times and side effects of medications. other barriers for the diverse seemingly disorganized and incomplete sources of information about where to seek care, what services were available, who is eligible and how to apply. further, much of the care provided was not evidence-based

care. evidence-based care is care that is statistical analysis shown to be effective. of those who ptsd or depression and sought treatment, just over half received minimally adequate treatment and number received evidence-based care would be even smaller. and our cost analysis coifs on delivering high-quality evidence-based care to all veterans with ptsd or major depression would save money for society to improve outcomes for those treated. finally, veterans transition -- transitions from military to nonmilitary life, often involve finding a job or going to school. as many realize, the job search routine in educational benefits can make the transition smoother. rand studied unemployment among returning reservists and found many chose not to return to their pre-activation jobs come about in day to unemployment compensation for servicemembers.

although aimed at helping reservists who do not have a job, and the benefits were also hoping the service search for better positions. also, we've identified difficulties in the early implementation of the post-9/11 g.i. bill. the research may help the va and institutions of higher education focus efforts to make these benefits more accessible and easier to use. with the help of u.s. research ticket integrated view of the job-search education and health care of servicemembers who are transitioning from the military, particularly those with a heater health conditions. studies in this area, including rand studies have not taken an integrated view. thank you went again for the opportunity to address the committee. i hope rands works on these topics can help fulfill the mission of serving rhn veterans. >> thank you very much, dr. hosek. now all turned to crystal

nicely. >> good morning, thank you for inviting me to share bma has been todd's experience is with you today. i hope that my testimony today is that those looking and well understand frustration and heartache ever since my husband was injured, it assumed a higher responsibility to care for him and support him as we transition into a new life. my husband lost his arms and legs while serving his country in afghanistan. during a combat patrol through the village of le carre, which is in the southern helmand province, todd was hit by an ied. it has been a long journey since that day in early 2010 and you think would be easy for someone to lose hope and motivation after such a catastrophic injury. my husband has been a fighter since day one. and recovery he displayed the same irresistible spirit for which the marines are loved. first, fighting off infection and disease and working aggressively with physical medicine and rehabilitation.

he continues spreading through progression and train them and also for me in our future together. walter reid is diverse and each brand has their own particular needs. many of them are portion enough to be accompanied by their loved one. most family members who are left to run into new on unexpectedly and unprepared. we discovered we could have never prepared herself for what we face on a day-to-day basis for caring for loved ones. many of us out there last our lives back home in assuming the role of walter reid. life here has been a picnic here there's not much i have thing to can do without me or someone assisting that his prosthetic spirit is not able to perform many of the very asic activities of daily living that people take for granted. we tend to function independently, but the reality of his injuries are that i or someone be at his side. this is our new norm. for me and not a limit has

caregiver, private schedule, driver, coca grower but also his loving wife. to be clear, this is not an issue of -- i am also his loving wife. to be clear, this is not an issue of being overwhelmed with caring for my husband, but what is upsetting is the lack of support, compassion and benefits for these individuals. it needs to be just a little bit easier. for the family members, we must go through a tedious process to serve as a nonmedical attendant, especially at a time when we must oversee all their parts of

our council when we must oversee all their parts of our council when we must oversee all their parts of our council. i have to continually reapply serving as though i am being judged him a loving care for todd. helping him through his treatment is what i want to do, but i need the system to work with me to do that. it is almost disheartening to think that someone else to matter how willing they can be can care for my husband more than i can. as caregivers, we leave our job and school and there are those who have children to look after as well. we leave all of this to inherit another full-time job. i rely on compensation that is provided to nonmedical attendant to assist maintaining a household. what todd's injuries, the bills did not stop coming and in fact have gotten more expensive. we are grateful for what assistance we do get from the

marine corps, but had we not been greeted by the people who wanted to assist, would've been lost in the recovery process. although my husband is a surviving of quadruple entities, his injuries are similar to other warriors. transition in the military has been difficult. he has been a part of an integrated disability evaluation system, which i believe is supposed to be faster, more efficient to complete evaluations and transition out of military service. that has not been art. spirit of one point, a simple summary set on someone's desk from the 70 days, waiting for approval. i think chairman murray for help getting the issue resolved, but it should not take me talking to a united states senator to obey has been. more importantly, what about all the other wounded marines that have not had the chance to ask for that kind of hope?

coordination of care for todd has also been a problem. there seems to be so many coordinators that they are actually not on this mph at this time, doing opposite things. though she was trying to help, the federal recovery coordinator seemed to have too many people she was responsible for. this lack of communication is also exceeded benefits and programs. i received no information how to participate or enroll in what is offered by the va. for the benefits we know about, we are faced with problems in receiving them. for instance, periodically i do not know why this occurs and is especially difficult to get a clear definition -- definite answer, but we need help. chairman murray, i appreciate all that is currently being done to assist wounded warriors and their families. as for me on that revealed fully

express for what we do get and what is available to us now because every little bit counts. i hope my testimony today has been helpful to you. as you continue working to resolve these issues, thank you for a match and i'm happy to answer any questions you have. >> crystal, thank you so much for your courage in being here today and sharing your story and i really appreciate all you and your husband have done to educate me. thank you for being here. this serves two lorelei st. james. >> chairman brown, members of the committee, and pleased to be here to talk about she has worked on these approaches to estimating future capital and health care budgets. for the aging veteran population and for younger veterans returning from afghanistan and iraq, it is by another va effectively estimates the facilities and health care that veterans may need.

let me first talk about va's capital planning process. the va has thousands of facilities to provide health care and other services to millions of veterans, estimating the type and location of facilities and service this is a complex process. as we recently reported, va over the course of several years has changed its approach to explaining. v-8 current planning process is strategic capital investment planning process. however, i can tell you it's gift is an implied as planning tool. it's really to tell, but i can save va inc. number of leading practices. for example, va now considers capital investments across the organization using weighted criteria and expanded its five year planning horizon to 10 years. also prior, the planning process appeared to be moving in the

right direction. for example, va reduce the number of hot is enough and 82 community-based outpatient clinics. but it's not all good news. they face a daunting backlog of repairs about $10 billion. as we reported in january, 24 ongoing construction projects need an additional $4.4 billion to complete. moreover, va continues to face age-old challenges, such as getting stakeholders to agree i needed changes, legal and budgetary limitations and getting rid of excess or underutilized money. now let's move to developing health care budget estimates. in january this year, we reported the auc and really health care projection model and other methods to estimate its health care budgets for fiscal years 2011 and 2012. we found the model uses data reflecting the types of health

care that veterans might be a protected or potential cost in the number of veterans who might enroll for help kerry. overall, the motto for resources to meet demand for others asked you health care services that account for about 83% of va's health care cost estimates. the models projections only provide a starting point for the budget. throughout the budget process, the health care estimates is reviewed and weighed against other va and omb priorities and in june we reported the estimate using the model for 2012 and 2013 throughout the budget formulation process. in general a dn that the process, the president's request to congress could be higher or lower than the models estimate as va and omb we the estimate against other priorities or

initiatives. along the way, va has a voice in the us. for example, if omb estimates for nonrecurring maintenance is lower than the amount that the model projects, va determines the impact on health care services and decides what action, if any, it will take up with omb. va could also propose a lower estimate for not recurring maintenance based on other va priorities. for example, compare to good maintenance was $904 million lower for 2012 and went $.27 billion lower for 2013. but before that, one has to recognize the imperfect data and assumptions that change. also ,-com,-com ma projections are made three to four years into the future and budgets are developed months in advance.

in summary, the va uses sophisticated and complex methods to estimate its capital planning and health care budgets. these methods to help to provide transparency into the va's methods, but the estimates they produce like the models themselves are not perfect and all must compete for funding and sometimes unforeseen priorities. thank you you do not of their questions. in that thank you very much. we will turn to ms. heidi golding. >> madam chairman, senator brown and other members of the committee, thank you or the opportunity to appear before you today to discuss the health care of our veterans returning from overseas contingencies operations in iraq and afghanistan, which i will refer to as go go. i'll refer some of the medical conditions they have come the use of health care provided by the veterans health administration and cbo's projections of future potential cost to treat them. all costs will be expressed in

$2011. about 2.3 million active and reserve personnel have deployed to overseas operations are march 2011. the medical conditions resulting from their participation affect the numbers of veterans who will require medical care in the future, including provided by bhi. in total, 69,000 members have been evacuated from the combat theaters because of injuries and other medical conditions and diseases. many more seat care in theater or after returning home. germanic train injury, tbi postherpetic stress order, ptsd, are conditioned to stream it could report in bhi. however, problems that tbi and ptsd that is the proportion of people with those conditions, whether diagnosed or not is uncertain, partly because the conditions can be challenging to identify. this makes resource clinic for treatment of veterans more

difficult. nonetheless, did a helpful to resource planning does exist. for example, to march 2011 committee idea diagnostic total of 35,000 tbi is among service members. about 90% of those were classified as mild tbi, which typically heal quickly within weeks or months with relatively little medical intervention. both the dod in dha have implemented programs to scan. screening indicates about 7% of its new patients have tbi with ongoing symptoms. in addition, dha has diagnosed 20% of patients with ptsd. the rate is relatively high compared to published studies of problems, which generally range from about 5% to 25%, but is not surprising veterans who helped problems are more likely than others to seek care. the number of veterans eligible

for vha bennett said the next that will affect future or vha costs. about 1.3 million veterans have become eligible for health care through vha. just over half of stockier through march the 2011. the number of veterans who have ever used vha has grown by 100,000 per year since 2005. roughly half of those, those who have ever used bhi are 12 months from separating airbase. their use is typically highest in the months immediately after they enrolled the system. vha spent almost 1.9 million or $4000 per patient in 2010 and accumulated a total of six lane dollars to treat cocoa veterans through 2010. although veterans for 7% of all veterans treated 20 times, and they represented 4% of dha spending. cbo is projected resources of

dha would be between 2011 and 2020 to complete all veterans with care. cbo examined two scenarios. under scenario one, cbo assumes the number of deployed service members drops to 30,000 by 2013 and remains there through 2020. in addition, vha health care expenditures per enrollee wrote about the same rate of the national averages. under this scenario, vha retreat 1.3 million veterans at least once before the end of the decade. the annual cost for care would nearly triple over the decade, rising from 1.9 billion in 2010 to roughly 5.5 billion in 2020, for a tenure total of 40 billion. the largest growth would occur early in the projection. due to a large influx of new enrollees. because cocoa patients are less expensive to treat than the

average vha patient, they would consume 80% in 2020. for scenario to come cbo assumes number of service members deployed drops to 60,000 in 2015 and remains there. in addition, cbo assumes vha expenditures per enrollee grow at an annual rate that is about 30% higher than in scenario one. under scenario to come at a cost to treat veterans in 2020 is more than 50% higher than in scenario one, 8.4 billion. cost over 10 years would be 55 billion come almost two thirds of the cost difference is due to the faster growth in expenditures per enrollee. thank you very much. i'm happy to answer any questions. >> thank you very much. thank you two of your testimony today. it's really appreciated. when i first met you at bethesda, i was really disconcerted when you told me you have been waiting forever for your house and two finishes

joint ability evaluation process. you had to wait almost 70 days for approval of a simple narrative summary. .. it is very important, but he got to a point in this therapy where what he was able to do more stuff more independently, which didn't require his therapist to be there i guess during the

whole time. so it is kind of like a requirement and i don't know if it is the marine corps procedure that they go into therapy. and if todd was not being taught me things or it was getting redundant and he was doing the same things over and over again. he had pretty much accomplished much of what he had wanted to within that timeframe which meant taking up more space that other people could have been utilizing with a therapist. and so, i guess if you could be paying for his therapy or or for somebody else, it was just a waste of time i guess. >> what we spend your time doing? >> taking todd back and forth to therapy and just helping him with daily living. >> you talk to me a little bit about coordinators care that they were changing every two

months and you knew more than they did and they left and then you are training the coordinators. can you share with us a little bit about that? >> i don't want to say that all of them are at fault due to the situation because it is the way it is, but the way that the military side has, the liaisons coming in and out is very frustrating because they are not mos specific. they are not trained on the job to get done that are being asked of them. so they come here without the knowledge of what they are expected to do and take the time while they are there to learn what they are doing an by the time that they have adjusted and maybe have absorbed some of that it is time for them to leave again and new individuals come in who are still not mos specific. so that doesn't help us with what they are here for, the frustration and helping take the

stress off the families in able to do the things that are necessary. instead, me personally, had to look for outside assistance from, whether it was other family support or my case manager or -- that but was not assisted on the military side of things. that also does not aid and for me the beginning of the family process it is really hard to open up to people and trust individuals. so to be able to get a connection with somebody and have somebody there for that short period of time and then transition out and given somebody else knew it is not allowing us to have that connection or allow us to want to open up to them because we are like okay, if we come to you what are you going to do for me? i know more than you do, so it is extremely frustrating. i know that they're working on it but it is still frustrating. >> you are a tremendous advocate for your husband and i am

extremely impressed with what todd is capable of doing and i know that you are proud of that as well. i also know that he needs you at his side and you are there every single minute doing that. you have met many people through this process. what does somebody do that doesn't have a wife or a live-in caregiver? >> i think, that is hard because you do see it. in some cases the family support is maybe not there or maybe not there for the right reasons. i think, because of the lack of -- i don't want to say lack of knowledge but the lack of compassion when it comes to a lot of these guys. their next choice would be to reach out to somebody, i don't know, whether through military side of things or through the hospital because the hospital staff is wonderful.

i guess there is not really a way to say it. >> maybe you can share with this committee as he did with me about what your day is like. >> here recently todd has strived to become very independent with his prosthetic and without his prosthetic, i would be doing the work for two people every day. and with his prosthetic, and because of his knowledge and what he has been able to absorb through his therapist and his daily work and putting into therapy, i basically just observe and watch and if he needs assistance, then i assist him. if he asks, of course. >> thank you and thank you for your courage in and being here again too. mr. rieckhoff our government's ability to fulfill the sacred responsibility has been called into question by the ongoing debt crisis that is in front of us today. is the debt -- if the debt limit is not raise some have

speculated the government won't have enough money to provide veterans benefits checks as you can imagine and i'm sure you know this uncertainty is called an incredible amount of anxiety among our veterans and of course their families are going to stand at the iaea was at the white house yesterday and i wanted to ask you if you could describe with the impact of a default would dionne veterans? >> we don't know. and that is what we hope to find out at the white house yesterday and we came back with no real additional information for members. i would ask you all with the impact will be. i think the bottom-line for members right now is they don't know what is going to happen august 1. they don't know what is going to have been said "harper's." they don't know of disability checks are coming. they don't know paychecks are coming. that amount shiite checks are coming and they are extremely concerned. they are scared. some of these folks are 100% disabled and have got no additional information. we have been getting quite a few e-mails, tweets and facebook does. people are more and more concerned by the day and i think what they want they understand

generally where the debate is. they don't understand the specifics of how it will impact them. no one has been able to project with any kind of certainty how they should plan for the next 60 days. >> ism there is a lot of frustration. >> incredible frustration, just devastating disappointment and it has become demoralizing. not even from folks just here stateside but overseas. there is a guy on a checkpoint in afghanistan right now who doesn't know where certain what is going to happen to him and his family in 30 days. that is ridiculous. and it is outrageous, and our members are beyond upset. and so i would ask this committee, if you could help us get certainty, we have got, we have got e-mail standing by. i consider that to them within an hour and let let them know what is going on what we need clarity and guidance from you all in this town about what to tell them. we haven't gotten it. >> thank you very much. senator brown. >> thank you very much.

i was concerned a little bit you mentioned in your initial testimony about you have to go and get recertified on a regular basis to be in your position as a homecare? >> yes, sir. >> can you tell me little bit about that, what they told you? what is the process? how long does it take? why they told you need to do it? >> in the beginning from my understanding, it requires a doctor's approval, so like a reevaluation of the military servicemembers health and how they are getting better on a day-to-day basis. so, the use of or the need of medical attendance i believe his wife they make us reapply for it. and it takes quite a long time. in the beginning, months almost,

i know there was a waiting list for our nonmedical attendant assistance and reminder standing they are working on it to improve that and it has improved speed wise but going about how to get approved and the stipulations and a better understanding of it is a in need a neat i would have to have to say. >> how long actually, how long does your certification actually last? >> i think the longest you can request a nonmedical attendant is six-month. >> so how many times have you had to recertified? >> i have actually only had to do it wants for myself due to, i guess the stipulations or the requirements, the law that due to i'm transfer to record books to where my husband is that i know longer -- but i know

certain from other family members and other individuals that have gone through it had to reapply many times to know if that is due to the process for or the loss of paperwork or. >> thank you for that. i am wondering how long has todd been part of the ide has? >> what do you mean by that? >> he has been going through -- i know the expedited disability system. in listening to your testimony said it was very frustrating and there were breakdowns and i am sensing you didn't want to blame anybody because you are thankful obviously for the things that you have put on the other hand, you are upset at the fact that no one seems to be coming in saying hey listen, this is what you have. this is how you get it and this is where you go and how much are you going to get? has anyone ever done that and

actually sat down and laid it all out to you on out to you on a piece of paper so you can actually almost have a flow chart? >> before senator by spoke to us, nobody sat down and gave us more understanding of how the med or process plant and what was to be expected except that it was going to take a very long time. that is what we were formed of. >> how long is it from point a to the senator payne filed? >> he started i want to say the january timeframe because they said there was a possibility that it would take quite a long time so by the time todd was ready on therapy was completed and he was ready to leave the hospital, that it should be completed. >> so, you mentioned that just the summary took seven months but when it was on somebody's desk. i'm sorry, 70 days.

were you given any reason for that? >> when we officially thought it was sitting on somebody's desk. i believe that was what we were informed of that it was just sitting and waiting. >> certainly not acceptable. are you recognizing any additional hassles or problems, things moving along in a more expeditious way now? >> yes. as she put it, they really kicked them in the bud and we have not had any issues. >> that is great. is interesting because according to our original estimate it is 42,000. does it take a senator to kick people's lives to get help for those other soldiers that are -- and family members that are having similar problems? you have a husband that is

obviously extremely injured and for him to have to go through that stuff and u.s. well, i just find once again here we are getting back to the fact that the va is not here. maybe i would suggest sitting as a ranking member today but senator burgess consideration also that we try to find out why. >> i appreciate that and i will say that the military was responsible at this point and the secretary lynn is personally involved. >> my time is up and there are other members so i will come back. >> thank you very much. >> thank you madam chair and thank you all for your testimony. kristol especially thank you. you talked about your gratitude for chairwoman murray and we are all grateful for chairwoman murray but the fact is her gratitude goes the other way. we thank you for what you do. we thank you for the sacrifices you and your husband is given to

this country. we can't repay you. there is nothing we can do to repay what you have sacrificed. i think the va is probably listening to this hearing and i think constructive criticism you have given is very positive. the questions about the ideas process, the section leader, the mma recertification. i'm not going to ask him again. you did a fine job and now they say there needs to be more education and the needs to be streamlining because the quite obvious that with a number of disabled vets that are out there we can't -- the action of a senator, there is no way we can do it also the va has to step up in a bigger way and i think they are hearing that message through c-span or whatever means might be today. paul, i would like to echo your testimony. i think the lifetime cost of our huge but i think intervention in the beginning can save money and make the quality of life better for veterans. it seems like a lot of the

problems stem from access. a lot of problems stem from education. it is particularly difficult then rural america. we have tried to do some things and try to enhance mileage and tried to get more clinics out there. tried to get telemedicine going, more employment counselors and rural america. the challenges are many. this is not a fair question. but i am going to ask it anyway. if you are going to look from a rural america perspective, the challenges that are out there, we have made some improvements. is there more we need to be doing and what areas would you invest if you are sitting in this chair? >> yes, sir. there is a lot of room for improvement and that is what we are consistently hearing from our members. one thing that ice important for this committee and this entire town to really wrap their heads around is right now only 52% of

our generation of veterans are enrolled in va health care. only half. we have to think more creatively. the country thinks the va is the silver bullet that will solve all the problems in the of this generation. the va i know is improving and obviously we are disappointed they are not here. they have a lovely to go but we also have to think more creatively and i think we have to have a sustained effort that invests in community-based nonprofit that involves the faith-based community. the va has not been updated as a nationwide model. it's still catching up from 30 years ago in every way, shape or form so what we have seen is involving those communities leveraging technology especially. that is how you can get to those folks where they have decent access to the internet but that does give you a tremendous opportunity for renovation and for impact. you are not going to be a will to bring everybody 400 miles to the nearest facility so we have to think creatively and find ways to invest in the community-based solutions that

are working. find those pilots in and then take them to scale. because that is where we see the most consistent entrepreneurial attitude. is the community-based church group or vfw hall or people at the point of attack dealing with those problems. we haven't seen a lot of innovation that has really been encouraged and taken to scale outside of the va. so that is kind of a think a big right at the apple that we as a nation have to start to take on. the president has to reframe it as well. has got to talk about more than the va when we talk about veterans. >> thank you. i want to talk about local contracting and whoevercome i guess initially would be for ms. st. james but whoever would like to answer this. it is a huge issue in my state, the inability for the va to recruit and retain doctors and surgeon is a big, big issue. we haven't had a full-time orthopedic surgeon in my -- in

montana for several months. the va is trying to recruit one when they can get them, and now we have got veterans who have traveled out of state, out-of-pocket care, quality of life goes down. there are 400 veterans on a weightless now approaching two years were orthopedic surgeries. it is completely unacceptable and i know montana's not the only state in this boat. i don't think it is cost effective to ship somebody miles and miles, hundreds of miles away from their home for surgery when they could be contracted locally in areas where we can't get docs in the va. can you tell me if this makes sense to you to locally contract if you can't get a doctor that is a specialist. and if it is not you mrs. st. james, somebody else can answer the question but it appears to me that this could

help solve a problem where we have need and we can't fill a position. it just seems to me it would be a natural -- so you don't have to travel halfway across the united states and back again. >> i think that is more appropriate for someone else on the panel. >> anybody else want to take a shot at it? maam? >> all i can say is, because i'm not an expert in that aspect is i know there are some -- care. i do not know how they decide when it goes to fee-based care or not. >> okay. >> i am shooting a back to you, paul. >> when you are in the fight and you need ammo you put your hand back and you get ammo. these folks these folks were out in the site. they need immediate care and whether or not it's a contract

is like d.c. talk to folks in the field. they want to know who can i call right now they can help me? i think whatever it takes to creative delivered at that point of impact is what we need to come up with. >> that is my perspective. a think having people that need the knee or hip replacement that are on a list for two years is not a good way to run a ship and i understand the problem with recruitment and rural america and the private sector and the public sector both. so it is really important. i time is run out long pass. i want to thank you all for your testimony and appreciate your perspectives. >> thank you very much. senator isakson. >> i want to complement kristol on her courage and her bravery to be here and i want to take the presumptive position out recommended to the chairman and ranking member that her testimony be mailed to every member of the united states senate as required reading because i think it is a story that needs to be told over and over. sometimes we get so busy doing things like we are doing right

now which is running around in circles, we don't really take into consideration those that are meeting tremendous challenges in life because of what they have to do. you are a real hero to me and i hope the chair will do that and make sure every member of the senate at least get the opportunity to read what a true american hero kristol and her husband really are. >> i would hope that all america hears. >> absolutely. paul i appreciate you being a very articulate spokesman on the half of iraqi and afghanistan veterans. they are going to need -- there are a lot of them and the challenges are greater. the advances we have had in health care are wonderful but it also means there were a lot of people surviving battlefield injuries that didn't before. they require a tremendous amount of help and support so i appreciate what you are doing. kristol, on the nonmedical attendant auma when you are answering senator brown, you said that the va provided up to six months. i thought i heard you say?

>> i think it is actually military compensation because the va doesn't take you up until your servicemember has retired. it is military compensation and it is up to six months i think that is a requirement for my understanding. when i first initially applied for the nonmedical attendant they did it for year-end a year and then i was informed that it could only be six months. so, then i was informed again that i didn't rate it because i was transferred with todd. >> so you are compensated by the va is the nonmedical attendant? during that period of time? >> not yet, no sir. >> what i was trying to get at is, scouts question was right on point with me why in the world you would have to continue to reapply to be a nonmedical attendant over and over again. >> it is frustrating i guess. the servicemember does need the

assistance and the family is here to care or a friend or whatever the case may be. i don't know. i just know that they do require you to reapply. >> i know walter reed is being closed in the next 30 days if i'm not mistaken. have you had any consultation with the new moved to bethesda? i guess can't -- todd will be moving to bethesda. >> due to senator murray's kicking the. >> she is good at that. >> we actually have a date in which he is going to retire so we will actually not have to do the move, but they recently had a town hall meeting for servicemembers to come to so that way they could explain the move and ask questions if need be. >> ms. st. james i thank you very much and crystal i know you are in the physical evaluation, which means the bricks and

mortar and that type of thing. do you feel like the va is making adequate plans in terms of that and going to senator tester's statement about contract services particularly in states like montana and take south georgia where we have 63 counties where we don't have a position, private or fee for that matter. do you think the va is making adequate plans to deal with what is going to be a higher volume of services because of the veterans of iraq and afghanistan in terms of the fiscal plan? >> we look at their planning process both on the part of bricks and mortar as you mentioned as well as looking at their enrollee health care projection model. on the physical infrastructure side, the new planning process that they have which is called skiff, we haven't had time to evaluate that, to know whether or not it is taking into account what needs to be done. it does take into account that

overall plan, what needs to be done on the health care side for those services. but quite honestly, this gift process is new and we haven't had time to evaluate it. so i can only say that va appears to have progressed from its earlier days but the process was just used to inform the 2012 budget, so we don't know how effective it is going to be. >> thank you. thank you madam chairman. >> thank you. >> thank you madam chair and began crystal we really do appreciate all of your testimony. you have done a good job and it has been very informative but you represent her family and your husband very, very well. and more importantly i think all of the other families that are in the same situation. so give yourself a pat on the back. like i say you have done very very well and very helpful. hear so much comes from the top

down and it is so important and i appreciate you madam chair, having her here in the sense that you know, we don't dwell from the bottom up in the sense that the people that are actually out there fighting the battle like you are doing on a daily basis and it really is very helpful. paul i think the comment he made you made about the faith-based communities or the faith-based interaction in the communities, and not just faith-based but just all of the, you know the nonprofits, the charitable organizations that are trying to do a good job. one of the problems we had, we see all of these deployments from our guard units, and they, unlike going off with a regular unit and coming back you are still with your buddies and life goes on. over but all of a sudden to be thrown back and many times myself representing a southern state, many times going back and i think that is probably true

throughout the country, going back to small communities where there is not a lot of resources, very limited with the va and just the nature of the beast of how they are separated, it really is important. we would like to work with you to strengthen your ideas on how we strengthen those relationships and encourage that to flourish. could you comment about that for a second? >> yes, sir. i think it is about wrapping around these veterans when they come home and what is so impressive is a small percentage of people who are serving relative to the overall population so if we can find creative ways to galvanize around those veterans, it will be a worthy investment. i think what i see in the local communities and the rural areas especially as a patchwork of services. if someone calls me from rural montana says my husband is suicidal. the services available to them will be dramatically different than kansas or florida or somewhere else. so our team has a really difficult time of being able to

deliver or even connect them with reliable services because it is so patchwork nationally. and i firmly believe there hasn't been a significant investment nationwide in those committed to community groups of all kinds. the comparison we have started to dry recently as the veterans face right now is kind of like age 25 or 30 years ago, 25 days ago when he didn't have existing infrastructure. there is no nasa philanthropic estimations -- investment. a lot of the nonprofit started seven or eight years ago some of them out of people's trunk so we are in early stages of creating an entire network run a totally new set of issues whether it is multiple amputees, amputations were traumatic brain injuries are women's issues. a lot of the stuff is new and there is not a system in place nationwide to tackle it. i think we have really got to wish a national call over and over again on some of the issues that senator tester talked about earlier. the fact we still won't have enough qualified mental health care workers is ridiculous. i've been coming here every year

talking about this and the president sadat tomorrow said you want to serve your country be a qualified health care worker and we will pay you and will support you in train you, that is a great way for people to serve their country and i think they would step up. we have got to make those calls clear and we have got to think more creatively than outside the existing bureaucracies. >> very good. i agree. it got a budget but that infrastructure in place and another problem and you might comment on this crystal, is the fact that we do have stuff in place now and get families don't know about it. it is not readily accessible and if you can comment on that order ways that we can improve. i see that is something that they really need to get aggressive with. >> i like many have said that the strides that it been made are amazing because many years ago you didn't have what we have now. but i think that, at that being said, what should be focused on

now are the improvements that are going to be there for the future because the war is not going away and people are still going to be wanted. so a sensibility to the things that servicemembers are needing. in my husband's case prosthetics are a big thing so if we did move to a small town or a small area, what we have to go further away from our home due to they didn't have the technology or the things needed to be able to assist him with what he does need to make life easier on a daily basis. so, that drives are amazing and great in improvement is always something to be proud about, but it is a problem that is not going away and improvements will always be needed. >> thank you crystal. at thank you all of you for being here. we appreciate your testimony. >> thank you very much.

ms. st. james i want to ask you while you are here come i recently heard some very disturbing complaints from a female veteran. she told me she had a great deal of difficulty in accessing appropriate face care for so. she had exams from a doctor where he left the exam room open to a crowded hallway. had been -- by male veterans and other concerned. i am concerned about the lack of a separate women only inpatient mental health care units that we are hearing about as well. so i am very concerned that the va is not strategically planning for the increasing number of women veterans, something mr. racopp tension as one of the cost of this war. can you share with this committee how many of these back lot construction problems are needed just to protect the privacy and safety of women veterans? >> i really don't have that specific information.

i do know that there are initiatives at b.a. included in the planning process but i don't know specifically. >> is that something you can find out for us? >> we can certainly get back to you on that. >> i would certainly appreciate that. ms. goldman you testified to cost between 2011 and 2020 could total between $40,000,000,000.55 billion. that number of course doesn't take into account the cost of paying for previous generation of veterans that we are still responsible for. cbo did another report earlier this year on possible ways to reduce the deficit where they made a couple of recommendations about veterans programs. i don't support the specific proposals because they negatively impacted benefits which i believe we shouldn't be touching. but i do believe there are some ways that we can be more effective with taxpayer dollars, but not diverting it from direct delivery of services and health care. i wanted to ask you this morning, do you believe there is

enough excess of duplication that can be a dress to make the va more efficient without negatively impacting services? >> just one or two points that i want to make him that. the first is that we also had projections for the 2011/2020 timeframe for vha and for all veterans and the budget would grow -- not the budget but the amount of the cost to treat those individuals would rise from the $48 billion in 2010 to under the one scenario, 69 billion in the higher scenario which included higher medical inflation and so forth, think it was 85 billion. so, in the lower case we are talking about an increase of about 45% over the next 10 years. which is a substantial increase in order to be able to provide the health care for all the

enrolled veterans. now, we do not make policy recommendations and we have not in that paper looked at options for cutting that and we have not looked at deficiencies, so i cannot tell you about that specifically. i mean, you are aware of our budget options apparently, so we do have a couple of options and not? but it may also involve not just efficiencies, but it may involve shifting some cost. >> if we just do it patients and shifting costs will we meet that projection that you just mentioned? >> i cannot tell you, unfortunately. >> mr. hosek a 2008 rand study concluded there is a possible connection between having ptsd, tbi and major depression and being homeless. last month admiral mullen expressed concern about repeating the mistakes we made

after the vietnam war and he said we are generating a homeless generation, many more homeless female veterans and if we are not careful we are going to do the same thing we did last time. can you walk me through the cost of a budgetary human and caring for veterans after they become homeless, and if using care is a tool to prevent this? >> unfortunately. >> do you want to turn on your my? >> unfortunately i can't give you estimates of the cost. my concern, which i foreshadowed in my testimony, is that there are may be a value in being more proactive in guiding people as they leave the service. right now when servicemembers leave the service they receive an outbreak in that out brief covers among other things that benefits they are entitled to and advises them of course that they will have a post-deployment health assessment in the six-month follow-up of that if they are still in service and then leave later on.

but this information comes at them very fast and even though it is provided, which is a good thing, i'm afraid that many of them to really absorb it at the time and when they leave the military and go out and meet care or need to learn about their va benefits ready to learn about a job search support, they really don't know where to turn. they haven't necessarily absorb a the remembered what they were told. and what our research indicates is there is an bradley available, cohesive, easily accessible sources of information. now people absorb information in two ways more. when it is pushed at them or when they pull for it and a lot of the discussion that we have received has to do with the push of information and it is just making it available. but the fact that there isn't readily available cohesive sources of information is something that paul referred to. i think it is important too. i mentioned in my testimony that one thing we don't know much about are people who leave the

service. we don't know about their sort of joint speaking of educational benefits and further education, or work and their health care. we are particularly interested in and particularly concerned about. >> are you looking at the cost of that? >> these are simply ideas and i'm responding to you for your questions. these are not to my knowledge studies we have underway. i realize the importance of this and i wish i could give you a specific estimate. it is important i think to think about this sort of jointly occurring set of concerns servicemembers have. if they happen to be the roughly one in five or perhaps fewer servicemembers who leave with major depressive disorder or post-traumatic stress disorder, and they also want to find a job, or they want to seek health care, we are finding a lot of them are having trouble finding

jobs. a lot of them are not seeking -- they are not going to seek care. we have talked about the barriers to care that have come up and several testimonies this week and i know in your hearing last week. all of those things come together. trying to make things easier for veterans, to provide that information, something paul's outfit is particularly concerned with but it is not only something that should be left to volunteer organizations. it is possible that more effective support to be provided by the services or by a transition even for contract, transition outfits were simply by more effective web-based services available. for example, military one source of information has been a vague boon to servicemembers providing information from any service

related resources for servicemembers and their families before, during and after their deployment cycle. developments in that direction for veterans are likely to be helpful. as i mentioned in my testimony, veterans have reported difficulty knowing where services are offered, what kind of services are available, how to apply for them, who is eligible. those are fundamental questions. the fact that half of those with probable ptsd or ndv have not seen a physician and have not been evaluated within the prior year were to to our survey was striking. these are individuals who arguably ought to be evaluated. the there are certainly many veterans who leave, who can do well on their own but for people with these probable symptoms, and sometimes individuals don't report their symptoms so that is one of the reasons for this wide variance in the estimates. they should be incentivize and

have the information. we clearly have in the va system and issue a search capability. the va caseload itself is largely consisting of older veterans and the va handles many individuals who need health care. the immediate growth of the new generation of veterans, as you referred to it here in the hearing, is a challenge for them because they need to adapt their provider mix and those are growth problems. but to the extent that there are also providers available in the private sector, i will suggest without the basis of research that it is certainly worth thinking about trying to figure out how to make use of capacity in the private sector. >> i appreciate that in one of the points of the hearing is providing it in the private sector is not free. is still a cost and we have to keep focused on that. senator brown. >> thank you.

chrystal i just want to go back to you and i apologize -- if you have answered as i apologize. during your time going through what you were going through did you ever go to any outside agencies outside of the military, outside the va to get additional assistance and if so can you kind of explain what you did and what that response was like? >> well in the beginning, i really didn't know what was available. but due to my case manager, jordan hall, he gave us some information in regards to some foundations that could help. and finally seeped out the foundation, they were able to assist us like the sempre fi fund and operation homefront, soldiers angels. there are so many.

there are great foundations of help. >> great. thank you. mr. rieckhoff in your written testimony state the long-term cost between $600 billion and 1,000,000,000,002 care for veterans along. i'm interested in learning more about your estimate. says a study conducted by you folks or any other organization? >> i think this is actually to the doctor's earlier point. s. i smirked are all over the place and in part because we don't have real good research on a lot of things. these are high-end, low-end estimates that come from a variety of places ranging from rants to harvard researchers, to veterans groups. i think two things we have to identify to there are question is on homelessness, the va just released their new numbers at 10,000. those numbers are really fuzzy. places like new york don't even count veterans when they count

homeless people so we really don't know what the cost of that is going to be. on suicide specifically we don't know how many veteran suicides there are. that is really troubling. we see anecdotally suicides on the radar bases that are counted. if you separate them military and you are a veteran you don't get counted and we can't even begin to calculate those cost. i think it is important we recognize some of the best research that came in the rand study in 2008 is still the best research now. and that was privately funded. so, to answer questions or we don't know. i don't think anybody knows anybody who tells you they do know, let's see the research. across this industry as you think into the couple of years about how to spend money and how to support different programs, we need much more research. we all have a hard time i think finding really good data and i think the suicide is the best example. we have no idea how many veterans have committed suicide since 9/11. nobody knows because there's nobody counting. i think that is a nature problem

when he tries to forecast in a cost. >> thank you dr. hosek. did you notice at all a difference between active army, active military versus guard and reserve in terms of getting the materials because you indicated that when somebody leaves, they have an out briefing obviously. i know being from massachusetts that not only is the guard and reserve, you have to go through basically a total top to bottom and exit interview. they give it a packet and make make you rethink so when you are saying they don't have anywhere to go, quite frankly i would suggest that they look at the packet they have been given as we do here in massachusetts. what are your observations on that? >> well to begin with the specific specific answer i haven't seen any research whatsoever comparing the out

processing support for active versus reserve so i'm not sure but that difference would be. i agree with you that individuals actually receive briefings. they receive materials. they basically should have a starting point on where to go and that is good. at the same time, the recently redone a rand new york state veterans needs paper as well as the earlier paper indicated that a number of responses to veteran responses weren't sure where to turn, what to seek. this could reflect differences among individuals and their capacity to remember and recall information, or process complicated information. so i think as i said in a minute or two ago, while i think what is being done right now is probably very helpful, it is not totally effective. there is a question about how to continue to reach people after

they leave the service and begin actively seeking some sort of support or assistance. health care, g.i. bill benefits, what have you. >> thank you. ms. st. james in your analysis in 2,042,009, change with an increase in leases in leased spaces. this was va's efforts to adjust a property portfolio to match the agency's overall mission to move the delivery of care towards more outpatient facilities. in what ways can the veterans health it mezrich and expand their military of leased buildings and also is there any effort to have these buildings within already government on properties to in fact save money? >> the a result of his space

were looked at his improvements and i believe in 24229 they have reported in our report and indicated there had been some improvements in that. so, part of an initiative that is included in their planning is the nagin the planning for community-based outpatient clinics, which are directly tied to trying to give care to the more rural community. so it is a factor in their planning and there could be more that could be done in terms of that. i think it is an issue government wide of having more space than is actually needed and the need to take care of historical parties that are quite expensive to take care of. so, if i have an answer to questions, let me know and i will get back to you. >> thank you. >> thank you very much senator brown and i have some questions that i will submit for the

record. i want to thank each of our witnesses for their testimony on the lifetime cost of caring for her newest generation of veterans and i especially can't crystal want to thank you and todd for being here and for todd's service to the country. he has shown incredible service and sharing your story with us. you are an example to a lot of other veterans and their families were traveling down this road to recovery and i really believe your testimony today will go a long way in helping us to do a better job. as i said at beginning of this hearing caring for veterans is a cost of war that we have to account for. today's hearing is made clear at the cost of sharing for this new generation of veterans is not going to end when i come home. it it will be incurred over a lifetime. so as we are here today in the deadline for reaching a debt ceiling agreement quickly approaches, and various proposals to cut or cap spending are out there, we have got to remember the responsibility we have to care for veterans and servicemembers.

we as a nation must honor our obligations in good times and embed. so i appreciate all of you being here today to participate in share your perspective on a lifetime topic of this war. thank you very much. this hearing is adjourned. [inaudible conversations] [inaudible conversations]

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like any businesses postal service is -- decline and most profitable product category first-class mail which accounts for approximately 50% of our

revenue. that was postmaster general patrick donahue inmate testifying on the financial stability of the u.s. mail. this weekend announced plans to close more than 3600 branches across the country. lord more about post office operations on line but the c-span video library. search, watch, clip and share. is what you want, when you want. >> the how small business subcommittee on health heard opposing views today on the 2010 health care law. the hearing focuses on issues such as tax credits to help employers pay for insurance. the effort to create health exchanges for businesses to pool their resources and small business perceptions of the law. this hearing chaired by republican rené elmer's is one hour and 40 minutes. >> we are going to go ahead and get started. good morning to everyone, and i called the hearing to order.

i want to thank the witnesses on both panels. we will have to panels today who are testifying and we certainly appreciate their attendance and participation in this important subcommittee hearing. although the health care law want be fully implemented until 2014, businesses are you feeling the effects. a study released this week by the national federation of independent businesses found that small firms are worried that they lost would lead to higher taxes, or marts janet -- administrative burden and rigid -- bigger budget deficits without lowering costs were making americans healthier.- and under the law, manycits small-business owners will be required to offer coverage to m their employees or pay a penalty.to oer and the small business tax credit that has been touted to offset the small business tax credit that has been touted to offset the cost of health insurance is,

in reality, a temporary and a narrow one where the full credit applies only to the smallest of businesses. if your firm has more than 25 employees, you are one of the 23 million self-employed, you qualify for no credit whatsoever. we have heard small businesses are concerned that regulatory requirements on insurors such as the medical loss ratio may drive some carriers out of the market, resulting in fewer options and premium hikes. small firms are uncertain about whether they will be able to continue offering coverage. if so, at what cost and if not, what their penalties will be and what the coverage will cost taxpayers. this is all while our economy is still very fragile, an economy that is adding fewer jobs than forecast and still has a high unemployment rate.

in this environment, it is not surprising that small business owners continue to be hesitant to create jobs, expand or invest and there are more regulations ahead. during the health care debate, one of the most repeated assurances was that if you like your current health care coverage, you would be able to keep it. however, for a number of reasons, a small business may be driven out of its current plan. the department of health and human services predicts that over half of all employers and up to 80% of small firms may relinquish grandfather status by 2013. this means that small business owners and workers may be forced to switch to a higher priced plan or drop insurance all together. although the goal of health care -- although the goal of the health care law may have been to make health care insurance more accessible, its taxes, mandates,

regulations and administrative burdens are causing many small businesses our best job creators to postpone hiring and expanding. again, i thank the witnesses who are here with us today for participating. i look forward to hearing their input on how we can help to reduce the impact of some of the health care laws' uncertainty, mandates, regulations and requirements for our small businesses. i now yield to ranking member richman for his opening statement. >> thank you, madam chairwoman. thank you for yielding. today's hearing will focus on the health insurance landscape for small businesses since the passage of the health care bill. currently, employers are the principal source of health insurance in the united states providing benefits for more than 158 million people. given the role of business in providing insurance, two questions have been raised about the affordable care act. first, will small firms be able to keep existing health plans

and equally important, how will the affordable care act affect small firms' decisions to offer coverage. these are the questions we will address today. small businesses face numerous challenges when choosing a health plan. this includes making tough choices about coverage benefits, which physicians should be part of the insuror's network and what co-pays should apply to services. yet with all these challenges, costs remain the greatest barrier to coverage. according to one report, over the last decade, health insurance premiums have increased 113%. the affordable care act was enacted to lower cost and create more quality health care choices. still, the legislation has not been without its critics. some have argued that small firms will not only lose their ability to keep their plan, but most will drop coverage all together. we will hear from the administration and witnesses on both of these issues. one on the matter of retaining current health plan, cms has

issued regulations outlining how firms can maintain so-called grandfather status. the regulation provides latitude for firms to make changes because of rising prices. it also clarifies for firms what they need to do to keep their plan despite aca changes. while protecting small businesses' ability to retain plans is important, the reality is many firms will make changes. historically, small firms change plans due to rising prices or different benefit needs. now small firms will be afforded better service and choice when choosing a new plan. the affordable care act not only creates new incentives but maintain laws that encourage employers to purchase insurance. most notably, the employer provided benefits remain tax-free and employees can still pay premiums on a pretax basis. since 2010, small firms have been eligible for a new health insurance tax credit. one of my constituents, miss

williams, provides a great example of how firms are using this successfully. she owns a private health clinic in new orleans and was able to avail herself of the new tax credits. now all 12 of her employees have health care coverage and she said she was very pleased with the new health care legislation and its benefits for her employees. in addition to the incentives, insurance reforms are already on the books that benefit small firms. no longer can insurance companies discriminate based on pre-existing conditions or raise premiums without adequate justification. again, starting in 2014, private health insurance exchanges will create a virtual market for buying insurance. exchanges will provide another option and enhanced competition. something lacking in the small group market. with all these changes, what will all these changes mean for small businesses. one study predicted that employer sponsored insurance could shrink by over 20%. however, others such as those by

the rand corporation and the robert wood johnson foundation found that small firms would increase coverage. this hearing will give members of the committee the opportunity to discuss the affordable care act and its implementation, insuring that small firms can keep their plan while making coverage more affordable is critical. i want to thank director lawson and the witnesses that have taken the time out of their busy schedules to be here today. i look forward to hearing from all of you and with that, i yield back. >> thank you. as you can see, some of our other committee members have not arrived yet, but i will state for the record that if they have any opening statements, they can submit that for the record. i would like to take a moment just to explain the timing lights. you will each have -- you will have five minutes to deliver your testimony. the lights will start out as green. when you have one minute remaining, the light will turn yellow. finally it will turn red at the end of your five minutes, and i ask you to try to adhere to your

five-minute time limit and you have the button there to push to speak into t microphone. .. e centers for consumer information and insurance oversight. or the cchio, with the centers for medicare and medicaid services. prior to his current position, mr. larson served as director of the division of insurance oversight at cchio. welcome, mr. larson. you will have five minutes to present your testimony. thank you. >> good morning, chairwoman, ranking member and members of the subcommittee. thank you for the opportunity to discuss how the affordable care act is improving the affordability, accessibility and quality of health insurance available to small businesses and their employees. providing and maintaining health insurance coverage for employees has been a challenge for small businesses for many years. states have struggled for

decades really to improve their small group health insurance market and i know this from my many years of experience as insurance commissioner in the state of maryland. small businesses pay significantly more than large firms for the same health insurance policies. some estimates put that at about 18% more. there are a number of reasons for this. small businesses lack the purchasing power that large employers have. administrative costs for insurors in handling small businesses are much higher than for large businesses. small businesses usually don't have the human resources staff to navigate through the difficult process of choosing between health plans. prices for insurance for small businesses can be more volatile due to the smaller risk pool compared to large businesses, and employees in small businesses are subject to medical writing in -- medical underwriting in many states. this means that the rates that small businesses are charged can spike if just a single employee becomes very ill. the affordable care act

addresses these challenges in the market and helps close the gap between small and large businesses' ability to offer health insurance to their employees. first, starting in 2014, small businesses will be able to reduce administrative costs and pool their buying power by purchasing insurance through the exchanges. the exchanges are state-based competitive marketplaces for buying private health insurance. small businesses will be able to buy health insurance through a part of the exchange called the shop. shops will give small businesses and their employees many of the advantages of large employers, that large employers have today such as more choice, more competition and more clout in the marketplace. these shop exchanges are a one-stop shop where small businesses and their employees will be able to easily compare health plans, get answers to questions and then enroll in high quality health plans that meet their needs. health plans that participate in the state exchanges will compete for business on the basis of

price and quality. in this type of market competition has the power to drive improvement in both plan quality and affordability. we recently issued draft regulations which will provide states the flexibility to provide small employers with a range of options on how the employers offer coverage to their employees. for example, a small business participating in the shop exchange may choose a level of coverage and a level of contribution toward that coverage and then employees will then choose among the health plans available on the exchange within that level of coverage offered by their employer. or employers may provide to their employees a broader range of options such as shopping for any level of coverage among competing health plans. under the proposed regulations, the employer would write a single check to the shop, reducing administrative burdens. the shop is a premium aggregator would handle the administrative functions that can burden the small business owner.

shops will simplify the employee decision-making process by providing side by side comparisons of health plans' benefits, premiums and cost sharing. not only will the affordable care act benefit small employers by enabling them to pool their buying power, it will also protect them from premium spikes caused by an employee's illness. beginning in 2014, the aca prohibits new health plans from rating on the basis of health status or claims history. in addition, the law limits how much insurors can increase rates based on employees' ages. these new rating limitations will help make small businesses' health insurance rates fairer, more predictable, and easier to understand. in addition, limits on health plans medical loss ratios will also save small businesses money as insurors that fail to meet the mlr standard will provide rebates. finally, the law established a small business tax credit that's making health coverage more affordable for small businesses.

the tax credit is designed to encourage both small businesses and tax-exempt organizations to offer health insurance coverage to their employees for the first time, or to maintain coverage that they already offer. small businesses are already benefiting from the affordable care act and those benefits will expand dramatically as the aca continues to take effect. thank you for the opportunity to appear before you today to discuss the affordable care act's critical provisions to support small businesses' ability to offer health insurance to their employees. >> thank you, mr. larson. i'll begin the questioning. generally, grandfathering should allow you to keep the coverage you had when the health reform law was enacted, with some exceptions. the june 17th, 2010 and november 17th, 2010 rules on grandfathering list several changes that disqualify a plan from being grandfathered.

the rules seem to leave open whether other changes will be disqualified and leave open the possibility of additional administrative guidance. to explain how plans must comply to continue to be grandfathered, i'm wondering how can small businesses count on grandfathering if the guidance is vague and the rules may change as we go along. >> sure. well, as you point out, we put out the initial interim final rule back last summer which laid out kind of broad categories in which small businesses and health insurors have flexibility to alter some provisions of their health coverage but not so much that it really changes the fundamental nature of the coverage. we received and have reviewed various comments on many aspects of that regulation. we did, in fact, amend the interim final rule to provide actually more flexibility to

businesses and small businesses to maintain their existing coverage by allowing them to, for example, switch carriers if they wanted to switch carriers, if they thought they could get a better deal. so in fact, although we have amended the initial guidance that we put out last summer, we have done so in a way that really provides more flexibility to small businesses and to the health insurance issuers that provide that coverage. >> i have another question for you this time. small businesses are concerned about the possible mandates in the health care laws minimum essential benefits package. because many new services, treatments are likely to be required, the cost of premium is also likely to increase. what can you tell us about the institute of medicine's forthcoming recommendations on the essential benefits package? >> well, i can't tell you much about what they're going to say. we haven't received their recommendation, but if i can just summarize the process that

we will follow and i would add that we're i think like you very aware and tuned in to the need to make sure that the package of essential health benefits is an affordable package. there's kind of a multi-step process that we're following at hhs. the first step was that the department of labor performed a survey of employers to gauge what were the typical benefits that are offered in employer-sponsored coverage today, and we have got that survey. that's been published. the secretary also as you point out did ask the institutes of medicine to recommend to us methodologies or ways to think about how we should define the package of essential health benefits, but i do want to be clear because i know there's been some confusion on this. the iom is not the body that will be charged with defining what that list is. that's left to the hhs and we will do that and i think we have

announced previously that our objective is to have that guidance out sometime this fall. we know there's a lot of interest in that, both in the states and among businesses and insurors. so we're hoping to get that guidance out this fall. >> so basically, you do anticipate that there will be additional administrative guidance on the grandfathering -- >> on the essential health benefits, yes. on the grandfathering, i can't speak to that at this point. i don't think we're anticipating anything. but we continue to review these and as they need to be tweaked and improved, if that need arose, then we would look at that as an opportunity. >> i now yield to congressman altmaier for his questions. >> director larson, thank you for being here. economists have predicted that the employer mandate will lead to dramatic declines in employer-sponsored coverage, as you well know. in your view, will most small

firms drop their coverage or simply pay the penalty and what do you expect they will -- do you expect they will continue providing health care to their workers? what do you expect the outcome will be? >> we do expect small employers to continue to offer employer-based coverage. it's really a cornerstone of our economic system, of our employer-based insurance system. if you look at a number, i know there are a number of different studies out there, but if you look at for example the rand analysis or the urban institute, there are those two, for example, i think predicted significant increases in the offer rate, not decreases but increases. for example, rand predicted that you would see an increase for very small businesses, i think for example nine or less employees, from about 50% today to about 70% in the future under the aca. the numbers were similar for the urban institute. >> regarding the medical loss

ratio in particular, as you know, the aca requires insurance companies to spend at least 80% of their premiums they collect on medical care. what will this change mean for small firms, how will it affect the cost of coverage, in your view? >> the medical loss ratio provision of the aca is a very important and helpful provision to small businesses and individuals, because it applies to individual purchasers as well. it helps to provide value to small businesses when they are paying their insurance premiums by ensuring that issuers are not spending inordinate amounts on administrative expenses so it drives efficiency in the issuers for the insurance company and that creates value for the premium dollars that small businesses are paying. >> now, the companies would argue that it doesn't just drive efficiency, they might dispute that on its face, but they also would say that it's going to drive small insurors out of the

health insurance market entirely. do you have a response for that? >> we don't think that's the case and we haven't seen that. i guess i would also hasten to add that the affordable care act specifically provides states and the secretary with the flexibility to address at least in the individual market the medical loss ratio provisions. in the small group market, in fact, many states already had in place medical loss ratio targets. i think there were around ten that already had an 80%, there were a handful that had less than that. so that was already present in the marketplace and many insurors were already used to pricing to an 80% level. >> do you envision cms playing a role in ensuring competition in the market? were you given that authority under the law, and are you going to -- >> well, i mean, when we get to the exchanges in 2014, competition is kind of the cornerstone of what we're trying to accomplish in the exchanges. we will be working actively with

the states as they set up their state exchanges and to the extent that we're operating a federally facilitated exchange, we will do everything we can to make sure that there's competition among insurors. the exchanges are all about competition among private carriers to the benefit of small businesses and individuals. >> last question, madam chair. since 2010, eligible small firms have had the ability to obtain a health care tax credit and according to the nfib information provided to this committee, 1.1 million small businesses are eligible for either a partial or full credit. while i realize the irs administers that credit, does cms have any estimates on employers taking advantage of the credit and how it's lowered their costs? >> yeah. i know that there are varying estimates about both the eligibility rate and the uptake rate and some of it's survey-based. we are currently working with our colleagues over at treasury and irs to get an estimate on what that is. i apologize, i don't have it for you here today. but we hope to get that soon.

>> great. thank you. >> thank you. i have a couple more questions for you, mr. larson. small business owners have told us the new law and its regulations are vague and we mentioned that already, and they don't know what is required of them. for example, many aren't sure of the employer mandate applies if they have employees who are working 30 hours a week or less. if they currently offer insurance to the individual employee, they aren't certain if the new law requires them to also cover the employee's family. how are the small business employers who have -- who don't have the benefit to large administrative staffs or outside benefit counselors to advise them to be expected to comply with the complicated law and its numerous regulations? can you clarify some of that for us? >> yeah. that's a very important question. i think some of the surveys that

have been done, although we don't necessarily agree with many of the points that came out in the nfib report or the mckenzie report, i think one thing that comes through clearly in those is that there still remain a lot of questions among small business owners. either they don't understand the law, they don't feel they have enough information. i think that's an important point that we have to take note of, that between now and 2014, we have to continue our efforts to reach out to small businesses and educate them. there are some tools that will be available, for example, in the exchanges. there's a role of these entities called navigators which are going to help people understand the health care law, understand how to access the exchanges. but there's more work to be done there and i think there's been confusion. some misinformation. i think it's something that we definitely need to focus on between now and 2014. >> new regulations require insurors to spend 80% to 85% of premiums on direct care for patients rather than administrative costs.

these requirements may be difficult for small insurors to meet, driving them out of the market, limiting consumer choice and raising the cost of insurance, which is of course as the market decreases, that's always the risk. how can small insurors compete when they don't have the resources or economy of scale to do so? >> well, we're certainly sensitive to the need to maintain competition. ultimately, the affordable care act provides some flexibility in the individual market but less flexibility to modify the mlr standard in the small group market. however, again, i think as i mentioned earlier, there were already existing in many states a medical loss ratio standard at or about the standard set out in the aca and i think that provided a benchmark from which carriers, you know, could launch from. >> interestingly enough, very

recently, in fact, last friday, last friday edition of "the hill" newspaper had a front page article titled "health care law could leave families with higher costs." the article describes the debate over what the story terms a major provision of the health care reform law which provides that if a worker has employer-based coverage that's affordable for the employee only, the family is expected to take the employer coverage even if it is unaffordable. is this the correct interpretation and can you clarify some of that for us? >> we are actually looking at that very issue which is the interpretation of the application of the tax credit to the individual, to the family and who qualifies at what point, when an employer makes an offer, is that binding on the dependents of the family members

of the employee. we are anticipating in future guidance to clarify this and a number of issues relating to the application of the tax credit and how it works. we put out a first kind of wave of guidance just a couple weeks ago on the exchanges and the next phase of that, which will deal with eligibility and enrollment and the application of the tax credit hopefully will clarify some of those issues. >> then i have one last question. this also addresses one of the issues that was referred to. the tax credit, along the tax credit issue, may apply temporarily and narrowly if the business has fewer than 25 full-time or equivalent employees making an annual average wage of $50,000 or less but what about every other small business? what advantages do they have as far as a tax credit? >> well, you are correct in that the tax credit was targeted

toward the smallest of the small businesses with under nine, getting the maximum credit. you can get up to 25 depending on what the wages are that you pay your small business. one of the reasons why it was targeted, because those were the small businesses that had the lowest offer rates. as you move up to say employers with 50 employees, you have offer rates of insurance coverage that can be in the 80% to 90% rate. so the tax credits were targeted towards that segment of the market that was most in need of help in terms of getting the offer. there are still many benefits as i mentioned in the affordable care act for businesses that are larger than 25, the rating restrictions are very important. small businesses, and i know this from my own experience, in many states small businesses get rated up if they have sicker members. so that practice is going to go away. that's going to create a lot of

fairness. and much lower administrative costs, cbo found that as well, and that applies to all small businesses, not just those under 25 employees. >> so you do see some possible changes or flexibility -- >> well, there are benefits to small businesses but you are right, the tax credit is targeted to the smaller small businesses because again, it was concluded those are the ones that have the lowest rates of insurance coverage for their employees. >> thank you, mr. larson. i just would like to ask if there are any additional questions? okay. well, i thank you for joining us today to answer our questions and providing your insight on these issues. we will continue to closely follow them and want to work with you and help ensure that small businesses have flexibility and choices in their health care coverage decisions. i want to suggest that mr. larson ask a member of his staff to remain here during the testimony of the second panel

and would you please identify, and i believe we have already spoken, so thank you, perfect, wonderful. thank you again, mr. larson, for your time. i truly appreciate it. now i would like for the second panel to come forward. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] >> wonderful. let's go ahead and get started. thank you so much for coming today to be with us for this subcommittee hearing.

our first witness dr. holtz-eakin as president did the american actionsaiken, president of the n action forum. resserved as a comssionerf foreign chartered financial crisis inquiry commission from 2009 to 2011 and director of the congressional budget office from 2003 to 2005. he received his b.a. in mathematics and economics from dennison university and his ph.d. in economics from princeton. welcome, doctor. you have five minutes to present your testimony. >> thank you, chairwoman ellmers and ranking member. appreciate the chance to be here to talk about the affordable care act small businesses and employer sponsored insurance. you have my written testimony which i submitted for the record. let me just make a couple of points. the first point i think the overriding one is that ultimately the ability of small businesses to offer insurance is contingent on the health of

those businesses and their ability to grow. the affordable care act contains many provisions that i think are detrimental to the ability of small businesses to prosper and grow. there are taxes, 3.8% investment tax is going to be a direct hit on small businesses. there are a large number of mandates and penalties and the regulatory implementation i think is daunting to any small business. we're in an environment where in 2010, we had a record number of federal register pages that was prior to the implementation of the affordable care act and dodd/frank and a whole bunch of other things. this adds to the regulatory burden. even some of the so-called help the tax credit in particular is structured in a way that penalizes growth. if you add workers, if you pay higher wages, even this temporary tax credit gets scaled back and it's ultimately a penalty against those who succeed. the structure of the aca is not one that i would call good economic policy to promote growth, especially among small businesses. the second is that the

affordable care act is going to raise insurance costs. there's now a consensus that it fails to bend the health care cost curve which is the fundamental driving force underneath premiums and small businesses will suffer from that. it has $500 billion in new taxes, many of them are taxes that are going to go directly to the premium bottom line. my testimony outlines the impact of the so-called premium tax on health insurors. there is medical device taxes. all of these are higher costs in the food chain that lead to higher premiums. that will hurt the ability of a small business to continue to offer insurance and leave many of them to elect to drop their coverage and/or never offer it to begin with. third point i guess is that this issue that was mentioned with the previous witness, the question of the incentives for employers who drop coverage and send their employees to the exchanges. there have been a number of studies that looked at the pure

financial incentives for employers and employees to mutually agree that it would be in their financial interests to provide the insurance through the exchanges and we concluded that up to 35 million american workers would benefit from this arrangement and that their employers would agree they should go off the exchanges. the only loser in that is the taxpayer, has to pick up an enormous tab. a recent paper by a cornell professor comes to roughly the same conclusion. i'm aware there are other studies that say no, that won't happen. their leading argument appears to be it won't happen because we have always offered insurance but in the face of a dramatic policy change, i don't see why that's a compelling argument. we are now seeing the leading edge of evidence. we have survey evidence from mckenzie, pricewaterhouse-coopers suggesting that in fact, this financial incentive is not only real, it will be pursued by businesses. i think this is a serious concern because the subsidies are enormously generous. we are talking about $7,000 for

someone making $59,000 in income in 2014, well over 10% of their income. it would be financially ir rational for employers and employees to ignore that kind of money. if it's true that many pursue this, the budgetary costs of the insurance subsidies through the exchange is going to explode. could be easily double what was in the original bill. we are all well aware of the financial problems that face the united states government and to have this come in much more expensive than was budgeted i think is an extreme danger which means we are back to my first point. in the end, it is going to be the environment for small businesses to grow and prosper that is crucial. there is nothing about sailing directly toward a debt crisis that is good economic policy or beneficial for the small business community. at the heart of our debt problems are explosive entitlements and my view is that the affordable care act has a whole series of upward risks on the budgetary side that make the possibility that that crisis much higher and as a result,

have to be viewed as a threat not just to the economy but to small businesses in particular and certainly to their ability to continue to offer insurance to their employees. i understand the sentiments behind the affordable care act but i think on balance its structure is one that hurts the small business community and doesn't aid it in the end. thank you. >> thank you for your comments. we do have your testimony, as we do all of our panelists. i now yield to representative kingston from georgia for the purpose of introducing his constituent as a witness. >> thank you, madam chair. it's a great honor to be with you on this dais. i appreciate all the hard work that you do on this subcommittee to try to promote jobs in this tough economic environment. appreciate the panel for being here. i have a hard deadline at 11:00 with another committee on which i serve so i'm going to be

leaving shortly before then but i wanted to say hello and introduce my constituent, brian vaughn. he is no stranger to the struggles of an entrepreneur. he has been with the burger king franchise operation since 1980 and kind of came up through the corporate structure working in florida and in georgia, and then in the 1990s, took the plunge to become a franchisee himself. since that period of time, has bought out his partner and been on his own with his wife. not sure if cindy's here. but knows the importance of keeping employees happy by offering good compensation package, including a good benefit package, worker safety, a good environment to work in, and has many employees who have been with him on the management side for over ten years, which is remarkable. he has four stores in three

different cities and also knows what it's like to compete in this environment and to get the customers back in when it's very hard on their pocketbooks in today's economy, but knows all the challenges that small business people face, really labor, environmental regulations, safety regulations, franchise regulations. i think he's been through it all but has done it successfully so i'm very proud to have him as a constituent and as an example of an entrepreneur and then want to point out also, one of his jobs before he became an entrepreneur was to recruit entrepreneurs. so he looked at it and did not have to take that plunge, yet he made it anyhow. i'm proud to have brian vaughn here today and i look forward to his testimony. >> chairwoman ellmers,

distinguished members of the subcommittee, thank you for inviting me to testify before you today on how the new health care law will impact my business and my employees. as the congressman stated, my name is brian vaughn. i own nearly famous, incorporated which consists of four burger king restaurants in georgia and i'm happy to be here today on behalf of the u.s. chamber of commerce. i'm also a proud member of the national franchisee association and have served on their board of directors for three years. nothing i say here today reflects the position or opinions of my franchisor, burger king corporation. when people think of burger king, they think of a big international corporation. even though the sign on the door says burger king, in my four restaurants, are small family-owned and run businesses. i began working as a burger king assistant manager in 1980 as the congressman said, earning $14,000 a year. after working my way up, i partnered in 1993 with francis lott to open our own restaurants in georgia.

in 2001 i bought out my partner's interests and today, i operate these four restaurants with my wife cindy. at our four restaurants we are proud to have created 182 jobs. we have 59 full-time employees and 123 part-time employees. 14 of our full-time employees are managers for whom we currently pay 100% of their health care premiums at an annual cost of nearly $56,000. we also pay for term life, short term disability, vision and dental insurance. my wife and i participate in this very same plan. for our other employees, we offer a value mini med plan at a cost of between $106 and $165 per month. currently only 19 of the more than 100 part-time employees have elected to participate. many employees choose to keep the wages they earn to help pay for their day-to-day living expenses rather than use a portion of their wages to pay for the coverage. as the president of my company, i also have to decide how much of the company's income can be used to pay for wages and

benefits and how much has to be used to cover the expense of daily operations. there is only so much money and first and foremost, we all have to cover our daily expenses. washington it seems really doesn't understand this. a lot of noise was made last fall about the types of plans that i offer my employees. under the health reform law, washington has decreed that these so-called limited benefit plans are not acceptable. despite repeated promises that if you like your plan, you can keep it, the law has outlawed these plans beginning in 2014. i understand that for many, a more comprehensive plan seems a critical and by comparison, these limited benefit plans are slim. however, it's important to acknowledge reality. these plans are less expensive and allow my team members to choose to take more of their wages home and use a smaller amount of their wages to pay for some coverage. prior to health reform, i had the flexibility to hire more workers, pay them a wage and

offer them access to this moderate coverage. now i'm being told by washington that i have to offer all my full-time employees washington-defined health coverage or pay a penalty. because of the cost of offering this prescribed coverage and the size of the penalty, i'll have no choice but to restructure my work force in a way that protects me from losing everything i have worked for. what does this mean? given the law and the unfinished regulations and i mean unfinished regulations, it's hard to say. i have no idea. prior to the law's enactment, my goal had been to hire fewer people for more hours. it's easier to retain employees that work full-time. however, now that the law is passed, i have to consider options other than what makes practical business sense. now because of what washington has mandated, it may make more sense for me to hire more people for fewer hours at a time when millions of americans are out of work. is this really the right incentive? this is not what i want to do and it's not what's best for my

employees but in order to survive and be able to pay the employees that i have to, it's what will have to do. i have not read the entire law and i'm not able to follow the regulations which are being issued at record speed, mind you, i'm trying to figure out how to protect the company that i have spent my entire life building. it's ironic that the law touted as the patient protection and affordable care act neither protects patients, nor makes health care affordable. instead, it's a law of broken promises under which no one will be able to keep the health care they have, even if they like it. it's a law which incents companies to scale back work forces and reduce the benefits offered by their valued employees. in conclusion, i understand that given the existing political realities, washington, d.c., a total repeal of the health care law by congress is an unlikely proposition, at least for now. however, i am hopeful that congress will repair or eliminate the more onerous burden such as the employer

mandate. these provisions saddle businesses with new requirements that actually encourage us not to expand our business and as toundingly, discourage us from creating jobs. the bottom line is that your decisions can help or hinder this. the laws you create can either give small businesses greater confidence and certainty to grow and generate new jobs, or just do the opposite. regrettably, this new health care law is already doing the latter and congress must take the action to rectify it. again, thank you again for this opportunity. look forward to your questions. >> thank you, mr. vaughn. i will just tell you that my very first job at age 16 was with burger king back in madison heights, michigan, in 1980. >> that's great. thank you. >> thank you again for your testimony. at this moment, i would like to introduce mr. william dennis. mr. dennis is senior research fellow at the national federation of independent business. federation of independent business. he has directed the nfiv's

research foundation since 1976. welcome, and you have five minutes to present your testimony. thank you. >> chairman, mr. altmayer representing kingston. last weekend they released a study called small business and health insurance one year after the release of ppaca. what i would like to do is release the results of that study since it's relatively current and relative to what we're talking about today. first of all, to be sure we understand who was included in this, we surveyed only people that were under 50 -- excuse me, small employers who only had 50 or fewer employees. it was a nationally random sample, it wasn't just the nfib members. there are probably some randomly in there, but this was a nationally random sample. it was done in late april and in may of this year.

it wasn't done yesterday, it's current enough so i think we can say it's the state of what we know today. the findings are really quite simple, i think. the first is that we essentially are in this period of declining offer rates by this series of firms. they're 42% now, which is the continuing of the down trend over the last ten years, at least, and our 42% number is not surprising. mex just produced one that was 39%, which is lower. and so it really does cap capti the trend. something else you should understand is basically nothing else has happened in the last year and nothing is projected to happen in the next year. people who had offered before tend to offer now and expect to

offer in the future. and those who do not or have not offered didn't pick it up this year and they don't plan to in the future. so essentially, what we're seeing as this continual down trend is going on and on. the one thing we are seeing, however, is that 20% with insurance expect major changes in that insurance. and virtually all those changes are not to the benefit of the employee. since enactment, 1 in 12 of small employers have lost their specific plan or been told they will lose their specific plan. of those who claim to be familiar with the law or having some familiarity with the contents of the law, they, by very large margins, overwhelming margins, particularly those who

insure think it will not reduce the cost of health insurance, it will not reduce administrative burdens, will increase taxes, will add to the deficit. they do agree more people will be covered, although they're not quite sure about whether that's going to yield greater health outcomes. there are -- i have a whole series of things here, but the -- to begin with, the tax credit, let's just look at the tax credit. we estimate, using some new data that we collected that we don't think is generally available, out of the 5,228,000 small employers in this class, an estimated 245,000 will be able to take advantage of the full credit. and 1.165 million will be able to take advantage of the partial credit. that's not how many will.

fewer will probably take -- fewer will take advantage of that, in part because of knowledge, but that's the maximum that will take part. now, beyond that, there is the whole incentive effect. how many will it incent? one of the things behind this is to not have a windfall for people who are already in it, it's an invent active centive t it. we calculate only 2% will have an incentive based on the full credit and more than that will have an incentive based on the partial credit as well. we also got a bid into the idea that will these small business owners, if people start to leave, low-income people start to leave for the exchanges, what are they going to do?

and 21% said they would seriously explore looking at whether or not they're going to drop their health insurance for everybody. now -- and another 26% said that they would do that with somewhat less certainty. so there clearly is a tendency or there is a thought process which would lead folks in that direction, and once competition actually sets in, new firms continue to churn without health insurance. we're going to see real market pressures not only not to add for those who don't have it but to lose it for those who do. thank you. >> thank you, mr. dennis. i now would like to yield to mr. altmayer to introduce your witness. >> thank you, madam chair, and it is my pleasure to introduce professor timothy jost. professor jost teaches at the

university of school of law. professor jost is the author of numerous articles on health care regulation and comparative health law and policy. he is also consumer representative to the national association of insurance commissioners. professor jost earned his j.d. from the university of chicago school of law cum laude. welcome, professor jost. >> thank you, all. the title of today's hearing is small business in ppaca. if they like their coverage, can they keep it? this was realized in section 1251 that if you like your plan, you can keep it. but notice the aca's commitment is to individuals, not to employers. it is not if you currently have

insurance through your job, you're stuck with that insurance no matter how it changes. it is, if you, the employee, as individual enrollee like your coverage, you can keep it. in fact, most employees do have insurance through their jobs and they give employers considerable flexibility to change their plans without losing grandfather status. employers can change their fo formularies and co-payments and out of pocket contributions. they can introduce their own contributions to premiums by as much as 5%. they can add new employees and new dependents. of course, if the plan changes too much, it ceases to be the plan it was. it's probably no longer the plan the enrollee liked and grandfather status is lost. the departments projected that 15 to 33% of plans would lose grandfathered status in 2011.

private surveys cited by mercer and hewitt in submitted testimony predicted higher levels, though they also noted that they didn't view it a loss and wanted to comply with the law as soon as possible. surprisingly last week it did not express widespread loss. small businesses intending to make significant changes in their plan have not lost their plan. it does report that 12% of employers have had their plan terminated or been told that it will be not available in the near future. this number is consistent with churn in insurance coverage available in previous years which showed this kind of turnover in the early 2000s. plans are always coming and going in the small market. nfib also reported that 20% of employers anticipated significant changes in their plans over the next 12 months.

but last year and the year before, changes and benefits and sharing in premiums as reported in the national kaiser t report were at even greater levels. this is a bad time in the economy, as we all know, and things are changing. another very important question is whether employers will continue to offer coverage after the aca is fully implemented. a number of studies have addressed this question. their predictions range at the extreme from those of dr. holt deacon who predicted isi would shrink by 20% and 9% of employers will definitely drop coverage. those of the ran corporation who estimated that coverage would actually grow by 17%. but studies by booth, urban, lewis, mercer and most importantly the cbo predict coverage will not change dramatically once the aca is implemented. in fact, all the reason

employers offered insurance now continue to exist after health care reform goes into effect. most importantly, employee benefits are exempt from federal and state income taxes and payroll taxes. in virginia where i live, an employee taxed at the minimum tax rate of 28% receives a s subsidy of 49% of every dollar of coverage they receive from their employer. the average coverage has an income of 43% above the poverty level and would not be eligible for the premiums in the affordable care act. employers who dropped insurance would have to dramatically increase to cover this loss of tax subsidy and the law prohibits them from dropping benefits from their lower wage employees but keeping them for their higher wage employees. health benefits also continue to be one of the most highly valued

forms of compensation and also help ensure a healthy and productive work force. after 2014, employees are even more likely to demand health insurance at work because of the individual mandate and large employers, not small employers, large employers will face a penalty if they don't offer insurance. in massachusetts which adopted similar reforms in 2006, employers offer rates grew from 70 to 76%. there is every reason to believe that the aca will not dramatically change the scope of employer coverage in the united states. thank you. >> thank you, mr. jost. i will begin questioning, and my questions are directed to each member of the panel. health care reform was supposed to make health care more accessible and affordable. do you think the new law does anything to help reduce the cost of health care? and i'll start with mr. jost. >> yes. and one example of that is the medical loss ratios which has

already been discussed. i follow the medical loss ratios very closely, i was very much involved with their drafting through the national association of insurance commissioners. one of the things that people are beginning to notice is that growth in health care costs has been dropping in the last couple of years. there's another report on that out this morning. at the same time, in the very recent past, insurance profits have been growing very, very rapidly, and people who follow the insurance industry closely are saying that if insurers have to spend 80% of their premiums on health care costs and costs are dropping, premiums can't continue to rise. they're going to come down. and we already saw that in connecticut where one insurer dropped its rates by 10%, we're starting to see it in other states. i think, in fact, the mlrs is going to have a dramatic effect in reducing the cost of health insurance for employers and individuals over the next couple of years. if i could just add quickly one

question that was asked earlier was, will it drive small insurers out of the market? i've read all the state adjustment requests that have gone final, and only in one state have any insurers left since the law went into effect, and as mr. larsen said, people are talking about it. it isn't happening. thank you. >> mr. vaughn? >> well, i certainly would have no way of knowing. i'm a business person. let me just give you a few numbers so you understand my situation. if you take 2010 and my small business, i'm a sub-chapter s corporation, so at the end of the year, the bottom line of my company was $319,000. if i took -- the way this plan exists now, if i took this plan and i insured all of my employees the way it's designed, it would cost me 307,000, okay, which leaves me $12,000. now, understand, i'm taxed personally on the net income of

my company, all right? but do i take that money? absolutely not. what i do, i have to turn that money around and reinvest in the building, buy new equipment and those sort of things. $12,000 doesn't even leave me enough to pay my taxes let alone reinvest in my business. the other piece of this is, i'm not likely to pay a penalty. why would i do that because i'm not really helping anyone. the penalty would cost me as much as the insurance i'm providing now. so my -- if this thing continues on the path it is, i can tell you right now that i will do everything i can to avoid paying the penalty. i will probably more than likely drop coverage, and what it will do to the cost of insurance, i have no idea. thank you. >> mr. dennis? >> one of the things that's really important to remember, when we started this thing, small businesses were very much in the forefront of calling for

reform on health care. and the reason was cost. cost was driving us nuts. this morning i believe i opened the journal, the wall street journal, and saw a study was out from the social security administration which projected that under the plan, under this bill, costs would rise faster than they would otherwise. it wasn't a great deal, but it was indeed faster. that's first. the second thing is, we're talking about relatively recently we've had some lower rates than we've seen in the past several years, and it's been attributed, some quarters to, indeed, the new law. but in effect what we're seeing is, in this recovery, very different from the last five years, is the relative demand and the relative purchases, if you will, of various services

have been much slower than average. and health care has been one of them. whether it's people not having the money to go or they're more pars parsimonious in considering what they could afford, i have no idea. then we start looking at everything that's inherent. you're going to have minimum benefits, and while we don't know what's going to be in the minimum benefit package, clearly, as mr. vaughn's example, shows there's going to be a whole series of folks that will have to add a lot more or don't do anything. then we have a lot of expensive things we haven't even talked about which don't directly affect smaller firms but some things like the class act and all these kind of things. then we have, of course, a whole lot of new folks coming on. so all this together is going to

drive costs higher. >> thank you, mr. dennis. dr. holt? >> i concur. in analyzing the bill that passed and became a law, the actuary concluded that it would raise, not lower, the national health expenditure. if the national health expenditure bill is larger, the coverage for that bill has to be larger. when the ceo put out its long-term budget expectations, it found that things went up, not down. the law contains two spending programs. they estimate it grows by 8% as far as the eye can see. there is no evidence of bending the cost curve anywhere to be found in those kinds of numbers. so if you dial your clock back to the beginning of the debate, there were two criteria in which any health care should be judged, the ability to cover americans with quality insurance and the ability to deliver that

insurance with lower cost and quality. it flunks the latter which is openly the fundamental driver of insurance costs in the united states. so things like the mlr are mere fiddles at the edges of tidal wave spending. and unless we get the tidal wave under control, premiums go up. >> thank you. i have one more question for you at this time. do you think the health care's mandate and taxes along with the new regulation that are being issued make it less likely that small businesses will hire more workers and expand their companies? again, i'll start with mr. jost. >> well, the -- small businesses, there is some incentives and disincentives. there are benefits under the law that small businesses get, that large businesses get and don't get, and there are some benefits that large businesses get that aren't available to small businesses. for example, large businesses need to cover the essential

benefits package. it's not clear to me that's going to be a major expense, because, in fact, what happens is state mandates are going to go away, and it's not at all clear the federal benefits package will cost more than state mandates. but that is something that large businesses need to cover that small businesses don't need to. on the other hand, large businesses need to cover the penalty if they don't pay and small businesses don't. i come from a family that started a small business about 20 years ago. my brother-in-law started it, borrowing money from us in the rest of the family and it is today a $300 million publicly traded company and its product is a household name. they didn't worry about am i going to win this benefit or lose this benefit if i grow a little bigger? they put out a good product and i think that's how american businesses work. i think under this law it's going to continue to work that way, it's just that employees and individuals are going to

have better health care coverage. >> mr. vaughn? >> well, i can start out by saying that overregulation is killing small business. let's just go back to minimum wage. i've already scaled down my staff and i'm running, frankly, as lean as i can run right now and make a living. the reality is there are going to be virtually no full-time jobs in this industry. i can tell you the way it will work in my company is only my management staff will be full-time, everyone else will work 29 hours a week or less, and it's just that simple. we cannot afford this thing. >> thank you, mr. vaughn. mr. dennis? >> right now, immediately, the overwhelming issue is uncertainty. we have absolutely no idea what's going on, and i think everybody would agree to that. i don't think that's a very controversial statement.

nonetheless, that has an enormous impact in terms of what you're willing to do in terms of investing. we're seeing that very clearly within the small business population. we do this monthly survey that we've been doing since 1973, and it's constantly showing that small businesses are much more pessimistic and feel much less -- how can i say -- favorable toward the economy than the larger folks. and that's borne -- their sentiment is borne out by a whole series of measures, including some that are contained in a recent federal reserve of new york paper. but that's the immediate thing. longer term, you have the whole issue of cost and takxes, and they go together, and what does that have to do with it? it simply means if the government has it, then you don't have it, and you have less

available to do that. so the question is, you know, you can't invest if you don't have it. then we have the interesting issue of growth and does the divide mean anything? for some firms, it will. it's simply do i go over 50, do i hold back some from 50 for fear of being held up on that thing. there will be a lot of firms who are growth firms that, as mr. jost used as an example of his brother-in-law, that will just go blowing right on by. they're going to be high growth firms, and they're not going to pay any attention to anything. but it is going to have impact on a whole lot of other smaller firms. >> dr. holtz-eakin? >> i guess i would echo the